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Introduction
Banking sector owes a pivotal importance in the economy of any country through itsvibrant functions.
A bank is a financial institution that offers the widestrange of financial services. These financial institutions play a vitalrole throughout the world’s economic system. The banking structure of Pakistan consists of State Bank of Pakistan, Commercial Banks, Exchange Banks, Cooperative Banks,Saving Banks and Specialized Credit Institution. “Banking meansthe accepting of money from public, in shape of deposits for thepurpose of lending or investment, repayable on demand orotherwise, and withdrawal by cheques, drafts, and pay order” The Pakistani banking sector mounted an overall recoverydrive, increasing its asset base by approximately 8% duringthe year . However, credit and business conditions are likely toremain fragile, driven by the government's weak fiscal position andthe subdued investment climate. Furthermore, downside risks mayfurther weigh on the banks' operating environment over the period.However, despite the material risks, no further major deteriorationin asset quality is expected over the coming period. NPLs are alsoexpected to have peaked at around 16% of total lending by year-end 2011, from 15.3% at end-June 2011. Short-term economicgrowth, lower interest rates and de-risking of the banks' loan bookwill drive stabilization in asset-quality metrics.Recognizing the system's structural challenges the Bank as a policyopted for and benefited from sound funding profiles and low-costcurrent and savings account deposits, which increased to 67% of total deposits or 56% of total liabilities at end-June 2011. TheBank’s reliance on market and foreign funding also remainedminimal. The year 2011 remained fraught with challenges for Pakistan,the core issues which affected Pakistan ’ s economy and werealso identified in the Economic Survey issued by the Governmentincluded persistent and high inflation, low growth, lesser inrevenue collection compared to
Banking sector owes a pivotal importance in the economy of any country through itsvibrant functions.
A bank is a financial institution that offers the widestrange of financial services. These financial institutions play a vitalrole throughout the world’s economic system. The banking structure of Pakistan consists of State Bank of Pakistan, Commercial Banks, Exchange Banks, Cooperative Banks,Saving Banks and Specialized Credit Institution. “Banking meansthe accepting of money from public, in shape of deposits for thepurpose of lending or investment, repayable on demand orotherwise, and withdrawal by cheques, drafts, and pay order” The Pakistani banking sector mounted an overall recoverydrive, increasing its asset base by approximately 8% duringthe year . However, credit and business conditions are likely toremain fragile, driven by the government's weak fiscal position andthe subdued investment climate. Furthermore, downside risks mayfurther weigh on the banks' operating environment over the period.However, despite the material risks, no further major deteriorationin asset quality is expected over the coming period. NPLs are alsoexpected to have peaked at around 16% of total lending by year-end 2011, from 15.3% at end-June 2011. Short-term economicgrowth, lower interest rates and de-risking of the banks' loan bookwill drive stabilization in asset-quality metrics.Recognizing the system's structural challenges the Bank as a policyopted for and benefited from sound funding profiles and low-costcurrent and savings account deposits, which increased to 67% of total deposits or 56% of total liabilities at end-June 2011. TheBank’s reliance on market and foreign funding also remainedminimal. The year 2011 remained fraught with challenges for Pakistan,the core issues which affected Pakistan ’ s economy and werealso identified in the Economic Survey issued by the Governmentincluded persistent and high inflation, low growth, lesser inrevenue collection compared to