Positive changes in Pakistan's economic conditions have significantly contributed to rise in the overall demand for credit.
Rising credit off-take of commercial banks indicates a significant growth of the economy, while a major campaign has been launched to ensure a fast track service for home remittances. This is confirmed in the Banks Lending Survey (BLS) just unveiled by State Bank of Pakistan (SBP), the central bank. The survey conducted during second quarter of financial year 2017-18.
The SBP said the positive changes in Pakistan's economic conditions have significantly contributed to increase in the overall demand for credit. "The overall demand for loans continued to expand over the last quarter and is expected to continue in Q3 as well."
Let have a look on the positive trends of BLS reports:
Pro-business Prime Minister Shahid Khaqan Abbasi, who is about to complete the first 100 days in his office, said despite the criticism of opposition parties, we are moving ahead in all directions.
- Deposits and other accounts of all scheduled banks rose to Rs11,947.396 billion by February 02 - CY-2018 - up from Rs10,688.884 billion last year.
- The total assets of all banks stood at Rs16,769.9538 billion, up from Rs14,731.549 billion last year.
- The gross advances rose to Rs6,591.324 billion, up from Rs5,498.440 billion last year.
- Investments stood at Rs7,891.247 billion, rising from Rs7,372.781 billion last year.
SBP's 'good-business' report said after receiving the feedback from senior bankers of 18 banks, the central bank identifies two main factors supporting the expansion in the credit demand. These factors include 'the need of firms for building up their inventories and working capital' and 'improved economic conditions'.
"Increase in fixed investment and seasonal increase in credit demand are two other factors," it further said.
The overseas Pakistanis sent home $11.4 billion remittances during the first 7 months of 2017-18, the SBP reported.
The inflow was 3.55 per cent higher than the like period of 2016-17. The SBP data showed that the inflow was significantly high from US, UK and EU. The remittances from Saudi Arabia at $2.914 billion were the highest, followed by the UAE with $2.512 billion and rest of the GCC countries with $1.314 billion. The remittances from UK totalled $1.585 billion followed by US $1.504 billion and EU $371 million.
In order to help the overseas Pakistani and their families back home, the government of Pakistan and the Sate Bank of Pakistan are pushing the commercial banks to reduce their handling charges to encourage the remittances inflow.
"We are urging all the commercial banks to improve their system for timely payments of remittances into the accounts of recipients," said Jamil Ahmed, deputy governor of SBP.
"We are doing our best to encourage the overseas Pakistanis so that they can transfer their money through official channels instead of 'hundi' and 'hawala'," he added.
Jamil made these remarks at the launch of a documentary film called 'hundi to kundi lagao' (Lock up the hundi), prepared by National Bank of Pakistan. It was a part of the bank's awareness campaign to encourage overseas Pakistanis to use official banking channels for remittances.
Jamil advised the bankers to use social media for marketing services. He said the amount sent by overseas Pakistanis through official channels rose 16 per cent between 2009 and 2017, making Pakistan. It is indeed heartening to note that the focused efforts of all stakeholders resulted in an increase of 13.2 per cent during the first two months of 2017-18 as against a fall of 3.1 per cent in 2016-17.
"Now there is a need to maintain this momentum and a positive growth trajectory in the coming months," he said, adding that the "focused area of inflow of remittances are the UAE, Saudi Arabia and other Gulf countries, which contribute 87 per cent to the remittances we receive."
Seed Ahmed, president of National Bank of Pakistan, speaking on the occasion said Pakistan is facing the challenge of balance of payment deficit and to meet this challenge the remittances play an important role.
"Inflow of remittances can be much improved if banks adopt the system of the fastest payment of remittances to the recipients," he said, adding that the idea behind making this movie is to urge the people that whatever money is coming into Pakistan, it should be routed through legal channels.
"Banks will serve the customers with an exceptional efficiency."
The banking industry is now doing its utmost to help the overseas Pakistanis with transfer of their remittances through fast track legal channels. That is a good news.
The writer is based in Islamabad. Views expressed are his own and do not reflect the newspaper's policy.