Banking sector berated over lending bias

ISLAMABAD: The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) on Saturday urged the banking sector to play its due role in national development by boosting its lending regime to meet financing needs of different sectors of economy. 

“The role of the central bank, which regulates the banking industry, is far from satisfactory which must be noticed,” said Atif Ikram Sheikh, chairman Federation of Pakistan Chamber of Commerce and Industry Regional Committee on Industries. 

“Reports of increased lending to different sectors are frequently published but the fact remains that the ratio of loans as compare to the GDP is on the decline since last twenty-five years.” 

Shaikh continued that the reforms initiated by the State Bank of Pakistan (SBP) proved to be faulty in design as well as the implementation.

“It allows the banking sector to support twenty big business houses, forward seventy percent of the loans to the corporate sector, prefer government over all other borrowers and lend over 90 percent of the agricultural loans to one province,” the Federation of Pakistan Chamber of Commerce and Industry official claimed.  

He added the common depositors continue to get a negative return on their savings, which has eroded confidence in the banking system. 

“The banks have increased their territory of services and the range of their products, but a lot needs to be done as many stakeholders still find it difficult to borrow from banks and they rely on loan sharks for money,” Shaikh said. 

The chairman Federation of Pakistan Chamber of Commerce and Industry Regional Committee on Industries further said the sectors ignored by the banks should be made profitable.

“Moreover, the industry should be forced to serve the unbanked population, while branchless banking, which is essential for the growth of banking industry, business, agriculture and the economy, should also be promoted,” Shaikh demanded.