Banks urged to focus on private credit

The State Bank of Pakistan governor has asked lenders to shift their business models toward raising more retail deposits and financing the private sector more heavily, according to The Express Tribune. Speaking at the 11th Pakistan Banking Awards 2026 in Karachi, he argued that the banking industry has an essential part in powering the country's next stage of durable growth. He said stabilising the economy was an important achievement but not enough on its own to reach high and lasting expansion.

Citing the sector's resilience, the governor put total bank assets at Rs69 trillion and deposits at Rs43 trillion as of end-June 2026. Profitability stayed strong, and the Capital Adequacy Ratio remained well above international benchmarks and local minimums. Even so, banking assets and deposits are still modest against GDP, trailing other emerging markets, and the currency-to-deposit ratio is high.

He also said there is considerable scope to lower dependence on cash and build the deposit base, urging banks to compete harder for retail deposits with attractive returns and quality services. Private-sector credit, he added, lags well behind emerging-market peers, and its ratio to GDP has fallen sharply over three decades. He argued that budget financing needs cannot be the sole reason, since some emerging economies carrying heavier state domestic borrowing still post far higher private credit-to-GDP figures.