Prime Minister Shaukat Aziz has praised the role played by the State Bank of Pakistan in checking inflation in the country. Had it not been for the monetary policy pursued by SBP, inflation would have been in double digits. Addressing the head of all banks in the country on Monday at the Governor House in Karachi.
Prime Minister Aziz asked the banks to be more dynamic in raising the consumer portfolios. "You should expect to run into some problems; however, consumer financing has to be structural to deal with such eventualities," he added.
The Prime Minister further said that rural incomes were expected to rise on account of good performance of the agriculture sector, especially wheat, thereby raising consumer demand which the banks could tap. Banks need to be more efficient and introduce new products, he added.
He lauded the role of the SBP in reforming and strengthening the banking system. The presence of a strong regulator in the country has attracted Foreign Direct Investment. "We do not distinguish between foreign and domestic investors but would like the right balance between FDI, privatisation and portfolio inflows to check volatility.
The Prime Minister emphasised that consolidation in any sector is a step forward, and, in a light view he added, there will be fewer people in the room (from the banking sector) in future.
He said the government is focussing on exports, which are increasing in the range of 5.5 to 6 percent, and would like to aim for double-digit growth. He assured the banking executives that margins and spreads in the system will come down with higher productivity and more competition. The present levels of margins are reflective of inefficiency, and therefore, banks need to focus on productive efficiencies.
He said SBP has been proactive in sanitising excess forex inflow and has effectively tackled inflation without choking growth. He assured the bankers that growth in the range of six to seven percent was sustainable as we intend to continue with the reform process.
He also assured the Islamic banks that they would soon hear good news about how to deal with their excess liquidity problem through issuance of (Sukuks) bonds especially tailored for them.
APP adds: Underlining the importance of a well-functioning financial sector for macroeconomic stability, Prime Minster Shaukat Aziz said that banking sector in Pakistan has been transformed into vibrancy thereby driving the economic growth in the country.
"The next budget will be growth-oriented and ensure consistency and continuity of policies," he said. The banking sector in Pakistan, Prime Minister said, stands out among the developing countries as an example of reforms and we are proud of our achievements in this sector.
He pointed out that comprehensive and institutional reforms introduced by the government have put the economy on a high growth trajectory and the government is determined to sustain it. He said the government has provided an investors-friendly environment, as all sectors of economy are open for business and this year total Foreign Investment is expected to be over 6 billion dollars.
The Prime Minister that said this year growth prospects look good as a record wheat crop is being expected besides significant increase in production of other major crops as well as healthy growth in the industrial and service sectors.
He told the bankers that a number of foreign stock exchanges have shown interest to enter strategic partnerships with Pakistani capital markets. The Banks Presidents and CEOs discussed in detail with the Prime Minister various initiatives taken by the government in banking sector and their plans to expand and diversify their business. Governor State Bank, Dr Shamshad Akhtar was also present in the meeting.