World Bank report: Pakistan’s poor still cannot access finance: Daily Times

ISLAMABAD: Despite significant growth of Pakistan’s financial system, access to finance remains elusive for most Pakistanis, especially among poor people, women, and small businesses in rural areas, says a new World Bank report launched Tuesday.
The report, titled “Bringing Finance to Pakistan’s Poor: A Study on Access to Finance for the Underserved and Small Enterprises,” says the average Pakistani household remains outside the formal financial system, saving at home and borrowing from family or friends in cases of dire need. In fact, only 14 percent of adults have access to a formal financial institution and about 40 percent have no financial access to formal or informal financial systems.
Policy efforts to increase access to finance in Pakistan have taken time to bear fruit, the report says, but now access is expanding quickly in certain financial sectors such as microfinance and remittances albeit from a very low base. The report says the major constraints to financial access arise from high levels of poverty, combined with low awareness of and information about available financial services, as well as gender bias. In addition, financial institutions’ efforts to expand access have been discouraged by slow technological advances, weak legal foundations, and unsuitable financial processes, and products.
“Despite significant banking sector reforms and efforts to expand financial market coverage over the past few years, outreach has lagged behind the country’s growth and development needs,” said Yusupha B Crookes, World bank Country Director for Pakistan “This report demonstrates that there is an enormous growth potential for financial services in Pakistan, especially in rural areas. Around one-third of the population borrows, but only three percent use formal services to do so.”

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MCB Plans Takeovers as Crisis Pushes Pakistan's Banks to Merge: Bloomberg

By Naween A. Mangi

Oct. 21 (Bloomberg) -- MCB Bank Ltd., Pakistan's biggest by market value, plans to acquire domestic rivals as the nation's deepest economic crisis in a decade and tighter central bank rules push more lenders to consolidate.

``We have excess capital and we want to deploy it in assets that make sense for us,'' Chief Executive Officer Atif Bajwa said in an interview in Karachi yesterday. He didn't say which banks he was evaluating. ``The advantage of looking to get something now is that asset prices are low.''

Central Bank Governor Shamshad Akhtar last month increased banks' capital requirements almost fourfold within five years to spur mergers and reduce risk. Bajwa will need to grapple with Asia's highest borrowing costs and a faltering economy that forced Pakistan to seek a $10 billion bailout to avoid default.

``There's going to be a domestic scenario of acquisitions and mergers in which MCB will be a prominent player,'' said Saad Bin Ahmed, head of research at Karachi-based Capital One Equities Ltd., who rates MCB's stock ``hold.'' ``MCB is part of a group which is financially very strong.''

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Pakistan’s banking system remains unhurt by financial market turmoil: SBP Governor: APP

KARACHI, Oct 21 (APP): Banking system of Pakistan has escaped the major ravaging effects of the recent financial market turmoil emerging from the US and engulfing the developed European economies. This was stated by Governor, State Bank of Pakistan (SBP), Dr. Shamshad Akhtar while speaking at the Asian Banker Dialogue on “The Banks We Like : and the Impact of the Global Financial Crisis on Pakistan’s Banks” here at a hotel on Tuesday.

The SBP Chief, however observed “In my assessment, Pakistan’s economy to- date has been affected mainly by the indirect impact of global events which led to the rise in the global commodity prices.”

Pakistan is perhaps the worst hit economy by the surge in global commodity prices as it has been a predominant factor in derailing the macro-economic fundamentals, she remarked.

Citing an example to explain this situation, she said almost 80 percent of the external current account deficit in FY08 is equivalent to the oil import bill which shot up to more than dollars 11 billion in FY08 as compared to below dollars 3 billion a few years back. Similarly, a large increase in FY08 fiscal deficit is on account of delay in pass-through of the international price hike at retail level, she observed.

Dr Akhtar said the financial markets in Pakistan have not been hit by the subprime markets or the associated contagion directly as Pakistan’s banking system from July 2007 to September 2008 did not face any liquidity problems. With strong regulatory oversight, we have seen significant enhancement of capital and capital adequacy ratio supported by high provisioning requirements.

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Finance, telecom help fetch $5.1bn in FDI: Dawn

By Shahid Iqbal


KARACHI, July 26: Increased attraction for financial business, telecommunications and oil and gas exploration collectively pushed foreign direct investment even higher than last year despite continued political uncertainties and poor economic performance.

The State Bank of Pakistan reported that while the telecommunications still maintained its attraction for the FDI, the financial business proved more attractive and invited more foreign investment than the telecom.

Researchers said for the first time financial business attracted more FDI than telecom sector during the last five years.

Telecom was still the second highest attractive sector despite decline in volume of investment in 2007-08 compared to last year.

Total FDI which crossed $5.152 billion compared to $5.139 billion of last year, a growth of 0.3 per cent, surprised many analysts and economists, painting a bleak picture for the economy.

For more on this article, please click on the following link: Finance, telecom help fetch $5.1bn in FDI: Dawn