KARACHI: Zafar Masud, Chairman Pakistan Banks Association (PBA) Monday highlighted the banking sector’s crucial role in the economy, revealing that banks have now overtaken the traditionally dominant oil and gas sector to become the country’s largest taxpayer.
In his opening remarks at the First Pakistan Banking Summit (PBS25) organized by PBA, Masud said that with banking assets reaching 48.7 percent of GDP in 2024, the sector plays a key role in business expansion, industrial investment, and overall financial stability.
He highlighted that the banking sector contributed a staggering Rs 644 billion in taxes as of December 2023, directly funding national infrastructure, public services, and economic programs. He noted that in a single day, the banking sector facilitated the collection of Rs. 30 billion in government revenue.
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He expressed concerns regarding the FBR’s approach towards banks, urging the tax authority to reconsider its methodology for imposing taxes on banking sector’s income, emphasizing banks’ role as trustees for both depositors and shareholders.
He stressed that taxation should be based on income rather than balance sheet. Banking sector is being taxed at a rate 1.86 times higher than other industries and currently paying tax @ 54 percent compared to 29 percent in other sectors. The rate is set to gradually decline to 43 percent in 2026 and 42 percent in 2027, he mentioned.
Masud informed that Pakistan’s banking sector remains the backbone of government financing, sourcing 99.8 percent of the budgetary deficit financing in FY24. This role extends to debt monetization, forex management, and maintaining reserves stability.
Furthermore, Masud said that PBA is not only working with FBR for data exchange but also collaborating with priority sectors for the finance ecosystem. “Our future focus is on strengthening ties with the government, fintech and global institutions”, he added.
He said that priority sectors SMEs, agriculture, digital and housing need to be targeted intervention to promote national economic stability.
“Instead of blaming us for not facilitating them, industries have to get themselves documented,” chairman PBA said, urging the finance minister to incentivize government schemes & Initiatives (restructuring & financing) but not forced.
He also urged that banks should not be treated as a scapegoat and taxation should be a policy to encourage investment, not a tax revenue target achieving tool.
Chairman PBA informed that beyond taxation, banks serve as Pakistan’s largest employment hub, with over 200,000 employees. With the State Bank of Pakistan (SBP) pushing for 20 percent female participation, the sector is actively working toward greater inclusion.
Addressing the shift toward Islamic banking, Masud reaffirmed the State Bank of Pakistan’s mandate for a full transition by 2027, aligning with the Federal Shariah Court’s ruling. The conversion includes migrating conventional branches, customer accounts, and financial structures to Shariah-compliant models. While banks are actively working on this transition, he emphasized the need for strong government support to create an enabling environment.
Masud’s remarks reaffirm the banking sector’s indispensable role in driving Pakistan’s fiscal stability, economic growth, and financial inclusion, while also navigating transformative shifts toward a more Islamic finance-oriented landscape.
On the first day of the two-day PBA Summit, four insightful sessions were held, where bankers and industry experts engaged in discussions on key challenges and opportunities shaping the banking sector.
At the first session of a high-profile economic summit titled “The Interconnected World: Global Economy and Its Impact on Pakistan”, leading global financial experts shed light on the evolving geopolitical and economic realities shaping Pakistan’s future.
The session featured Tan Sri Hj. Azman Mokhtar, Chairman of the Malaysian International Islamic Financial Centre (MIFC) Leadership Council, who provided a deep dive into the geopolitical and economic realities of today.
Dr. Salman Ahmed, Global Head of Macro and Strategic Asset Allocation at Fidelity International, emphasized the international economic paradigm shifts and their implications for developing markets like Pakistan. The session was moderated by Ahmed Bozai, Vice Chairman of the Pakistan Banks Association (PBA) and Citi Country Officer for Pakistan.
Second Session was on “Revitalizing Pakistan’s Economy: Path to Sustainable Progress” and addressed by Dr. Aasim Husain, Former Senior Official at the International Monetary Fund (IMF) and Kamal Munir, Pro Vice Chancellor for University Community and Engagement, by Cambridge University. This session was moderated by Farhan Bokhari, former Financial Times (FT) Correspondent and Columnist.
Third session was on “Digital Transformation A Journey, not a Destination” and moderated by Syed Faraz Anwer, Partner Consulting Strategy, Digital, Fintech, Transformation, PwC Pakistan
Naveed Sultan, Professor Imperial University Business School and Former Chairman, Institutional Business Group, Citigroup and Corey Thompson, Global Head of Digital Banking, Mashreq Bank were the speakers and in the panel discussion panelists were Muhammad Nassir Salim, President & CEO, HBL and Kanwal Cheema, CEO, My Impact Meter. This session was moderated by Syed Faraz Anwer, Partner Consulting Strategy, Digital, Fintech, Transformation, PwC Pakistan.
Experts at Session 4 titled “Banking on the Future: Sustainability & Impact in Pakistan” explored how Pakistan’s banking sector can drive sustainability and climate resilience.
Maria Smith (BII) highlighted the global ESG banking revolution, urging Pakistani banks to adopt green financing and responsible lending. Dr. Ayesha Khan (Acumen Fund) talked on Financing Pakistan’s Climate Resilience: From Risk to Opportunity.
A panel featuring Haaris Mahmood Chaudhry, Mobilink Microfinance Bank and Maya Ismail, HBL Sustainability Forum discussed microfinance, financial inclusion, and sustainable banking. Moderated by Habib Yousuf (BII), the session reinforced the banking sector’s role in fostering a resilient, impact-driven economy.
Copyright Business Recorder, 2025
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