SBP Governor urges banks to boost retail deposits, private-sector lending

August 22, 2026 (MLN): Pakistan's banks need to reorient their business models towards stronger retail deposit mobilization and greater private-sector financing to support the country's next phase of sustainable economic growth, the State Bank of Pakistan (SBP) Governor said while addressing the 11th Pakistan Banking Awards 2026 in Karachi.

The Governor said Pakistan's economy had shown resilience through a challenging FY26 marked by severe floods, geopolitical tensions and an uncertain global trade environment.

Inflation averaged close to the medium-term target range with expectations broadly anchored, while the current account deficit stayed close to the lower bound of the projected range.

Foreign exchange reserves continued their upward trajectory, comfortably exceeding the end-June target of $18 billion, with the increase driven mainly by SBP's foreign exchange purchases rather than debt-driven accumulation.

While policymakers had achieved the difficult task of stabilizing the economy, the Governor said stabilization alone was not sufficient to put Pakistan on a path of high and sustainable growth, and that banks had a particularly important role to play in this next phase.

Banks' total assets had reached Rs69tr, while deposits stood at Rs43tr at end-June 2026. Profitability remained strong, and banks' Capital Adequacy Ratio continued to remain comfortably above both international benchmarks and domestic regulatory requirements.

The Governor pointed to significant opportunities for strengthening financial intermediation, noting that banking-sector assets and deposits remain relatively low as a share of GDP compared with other emerging markets, while Pakistan's currency-to-deposit ratio remains elevated.

He said there was considerable room to reduce reliance on cash and strengthen the deposit base, and encouraged banks to compete more actively for retail deposits, including offering attractive returns alongside quality services, which would broaden financial inclusion while providing banks with a more diversified and stable funding base.

He also called for greater private-sector credit, noting that credit penetration in Pakistan remains well below that of emerging-market peers, and that the ratio of bank credit to the private sector relative to GDP has declined significantly over the past three decades.

He said the government's budgetary financing needs were not the only explanation for this trend, as several emerging economies with higher government domestic debt have significantly higher private-sector credit-to-GDP ratios.

The 11th edition of the Pakistan Banking Awards was organized by NIBAF Pakistan in collaboration with Dawn Media Group and A. F. Ferguson & Co. Meezan Bank Limited received the award for Best Bank.

Copyright Mettis Link News