Banks urged to support private sector in accelerating economic growth

  • February 23, 2015
Islamabad Chamber of Commerce and Industry has stressed upon the commercial banks to focus on private sector lending for accelerating economic growth and achieving sustainable national development.

Muzzamil Hussain Sabri President, M. Shakeel Munir Senior Vice President and M. Ashfaq Hussain Chatha Vice President, Islamabad Chamber of Commerce and Industry said that for the last couple of decades, banking sector in Pakistan has preferred to fund fiscal and public sector deficits instead of providing easy lending to private sector and this approach has dwindled the prospects for improving business activities and achieving long-tern economic growth of the country.

Giving some facts, they said that between 2007 and 2014, banks funding to public sector went up from Rs.1 trillion to Rs.5 trillion showing an increase of over 400 percent while lending to the private sector during the same period grew just from Rs.2.1 trillion to Rs.3 trillion which shows that banks have deviated from their important role of supporting private sector in full utilization of productive resources.

They said in 2007 banks were providing 67 percent credit to private sector which has fallen to just 37 percent by 2014. They said as per monetary policy statement January 2015, banks provided total credit of Rs.224.5 billion to private sector during the first half of financial year 2015 as compared to Rs.325.8 billion during the same period of last year which again shows banks’ declining supporting role to private sector.

They said this state of affairs needed urgent reversal and banks should focus on their core function for channelizing savings to investment in order to contribute more effectively for expansion of private sector and fostering better economic growth. They said banks have played vital role in supporting the impressive economic transformations of Brazil, China and India and urged that banks should also play similar role in Pakistan by providing easy credit to private sector that would help in turning our country turning into a rapidly growing economy and creating more jobs for youth.