Banking industry playing key role in economic growth: Masud
KARACHI: Pakistan Banks Association (PBA) Chairman and Bank of Punjab President Zafar Masud has said that Pakistan’s banking industry is playing a pivotal role in economic growth by strengthening the private sector through increased financing for businesses, SMEs, agriculture and housing.
Addressing a gathering during his visit to the Karachi Press Club (KPC), he said that economic growth must be measured not merely by the size of GDP but also by the extent to which its benefits reach ordinary people and improve household living standards, therefore banking industry has significantly expanded financing for SMEs, agriculture and housing over the past two years to promote inclusive economic growth.
He said SME financing had increased from approximately Rs490 billion two years ago to Rs1.2 trillion, while the number of SME borrowers had risen from around 200,000 to 350,000.
Masud said that the sustainable development would remain difficult unless all segments of society were taken along, accordingly, current leadership of the banking industry had recognized this challenge and started working towards more inclusive economic growth.
He said the State Bank of Pakistan (SBP) had set a target for banks to extend financing to 5.8 million farmers by 2028. He expressed confidence that banks would achieve the target and the volume of agricultural lending would increase from Rs1.3 trillion to Rs3.3 trillion by 2028.
Masud said the housing finance sector had also witnessed substantial growth. Around two years ago, in September, the number of housing finance borrowers stood at approximately 65,000, while the total outstanding housing finance remained below Rs200 billion. Currently, the number of housing finance borrowers had increased to 300,000, with approved financing reaching Rs455 billion.
He said the average loan size under the Punjab government’s housing finance scheme was Rs1.5 million, while the average financing under the federal government’s housing programme stood at Rs6 million.
Acknowledging that the banking industry had not adequately communicated its contribution to the economy, he said banks should have regularly shared these developments with the public.
On export financing, Masud said banks were continuing to provide financing to exporters at an interest rate of 4 percent despite increases in the policy rate. Export Refinance Scheme, previously provided by the SBP, was now being managed by commercial banks. Banks were bearing the cost of maintaining the concessional financing rate, effectively providing around Rs100 billion in subsidies to exporters from their profits, he mentioned.
Discussing the banking sector’s contribution to the energy sector, he said banks had restructured approximately Rs1.3 trillion in loans related to the energy sector to help reduce circular debt and support efforts to lower electricity costs.
Masud said banks had also played an important role in facilitating the privatization of national flag career PIA by restructuring around Rs300 billion in its debt. “This restructuring opened the way for PIA’s privatization. It was a financially disadvantageous decision for banks, but this is part of the banking industry’s contribution to Pakistan,” he said.
He said digital banking was expanding rapidly, with 92 percent of banking transactions now being conducted digitally. The number of merchants accepting digital payments had increased from approximately 500,000 to 2 million following the introduction and expansion of QR code payment facilities.
He further said the banking industry was among the largest tax-paying sectors in the country. Banks contributed 54 percent of total tax collections last year, while their effective tax rate stood at 62 percent.
He stressed the need for a “Charter of Society” to bring individuals and businesses into the documented economy, saying that economic reforms would remain weak unless every citizen became part of the formal economic system.
On the occasion, PBA Chief Executive Munir Kamal said Pakistan’s major economic challenge was the shortage of foreign exchange reserves, which forced the country to repeatedly approach the IMFfor financial support.
With lower FDI and exports growth, remittances from overseas Pakistanis have been emerged as a major source of support for the country’s external account. Workers’ remittances crossed USD 41 billion, highlighting their growing importance for the national economy.
He said that following the government’s decision to discontinue remittances transaction fee rebarstment scheme from July 1, 2026, the banking industry has taken over the responsibility.
The banking industry, in collaboration with the SBP, had also introduced a new initiative called the “Pasban Bank Scheme” to encourage overseas Pakistanis to send remittances through formal banking channels,
Kamal said banks would distribute prizes worth Rs4 billion every quarter, taking the total annual prize money to Rs16 billion. Under the scheme, bank accounts receiving remittances of at least USD 100 for three consecutive months would qualify for participation in prize draws.
Earlier, Karachi Press Club Secretary Muhammad Aslam Khan welcomed the PBA delegation and appreciated banking sector contribution towards economic growth. Former KPC Secretary Rizwan Bhatti, KUJ-D Secretary Rehan Chishti, President of the Council of Economic and Energy Journalists Raja Kamran, Secretary Kashif Munir, Secretary Finance Committee KPC, Ehtesham Mufti and a large number of journalists were also present.
Copyright Business Recorder, 2026