An interview given by Tawfiq Husain, Secretary
General, Pakistan Banks’ Association to Erum Zaidi,
Correspondent, The News International, on April 25,
KARACHI: Tawfiq Husain, Secretary General, Pakistan
Banks’ Association, foresees a moderate pickup in
consumer lending as a result of the softening of
interest rates. However, he emphasises the need to
strengthen foreclosure laws and other enablers for
Q. Many analysts criticise banks for reducing
private sector lending and their frequent investment
into the risk-free government papers. Is that an
A. It is not true that banks are not extending
private sector loans and parking their entire funds
into market treasury bills and Pakistan Investment
Bonds. Based on the banking sector’s statistics,
there is a year-on-year growth in loans or advances.
However, it is true that banks’ investments in the
government papers have been higher than the credit
disbursed to the private sector.
Q. How do you see the outlook for consumer
A. The outlook for consumer finance business is
better, given declining interest rates. There could
be pickup in certain consumer finance products like
personal loans and auto loans in the coming
quarters. Softening lending rates would make
mortgages more affordable, stimulating consumption.
However, to facilitate more consumer lending,
particularly mortgage and housing finance, the
foreclosure laws need to be strengthened and
recovery process improved. Section 15 A of Financial
Institution Recovery Ordinance was struck down by
the Supreme Court.
This has affected the recovery process for banks.
SBP has worked on an amendment to Section 15 A,
which, we hope, will strengthen the recovery process
and facilitate increased lending, in general, and
mortgage and housing finance, in particular. Also,
there is a need for Central Electronic Registry for
charges on movable assets of partnerships, sole
proprietorships and individuals. This will
facilitate lending to all borrowers who are not
private or public limited companies.
Q. How important is financial inclusion for the
documentation of the economy?
A. The government and the State Bank have developed
a National Financial Inclusion Strategy (NFIS) which
is very important.
The importance of this initiative can be gauged from
the fact that presently only 10 percent of Pakistani
adults have an account with formal financial
institutions, well below the South Asian average of
33 percent. Therefore, we have a lot of catching up
to do. The NFIS focuses on creating an enabling
environment for financial inclusion and its
resulting benefits for the people and the economy.
With a lot more savers and borrowers coming into the
formal banking/financial system, this will be an
important step towards documenting the economy and
contributing to the broadening of the tax base of
Q. Any update of recommendations for the upcoming
A. PBA will be sending its recommendations shortly
for the 2015-16 budget. We hope the government and
the Federal Board of Revenue will remove section
165A of Finance Act 2013. Apart from other
recommendations, we will also propose some measures
for the government to increase the tax payer base
Q. The government has approved Draft Credit
Bureaus Act, 2015. What do you say about it?
A. It is good to encourage private credit bureaus
and to expand the scope of these bureaus to include
positive credit information and other financial
information (bill payment history). There is also a
need to develop a database of frauds committed
against financial institutions.
Source : The