Essay On Banking Sector In Pakistan

Essay On Banking Sector In Pakistan-19
In this connection, the banks perform two important functions: (a) They mobilize deposits by offering attractive rates of interest, thus converting savings,, which otherwise would have remained inert, into active capital.(b) They distribute these savings through loans among enterprises which are connected with economic development.A very important characteristic of an under-developed economy is deficiency of capital which is the result of insufficient savings made by the community.

In this connection, the banks perform two important functions: (a) They mobilize deposits by offering attractive rates of interest, thus converting savings,, which otherwise would have remained inert, into active capital.(b) They distribute these savings through loans among enterprises which are connected with economic development.A very important characteristic of an under-developed economy is deficiency of capital which is the result of insufficient savings made by the community.

No doubt, the NPLs on banks’ balance sheet not only affect their capital but also affect economic growth.

NPLs continue to grow because of bad lending, and dismal economic conditions.

The role of banks in economic development is to remove the deficiency of capital by stimulating savings and investment.

A sound banking system mobilizes the small and scattered savings of the community, and makes them available for investment in productive enterprises.

In any plan of economic development, capital occupies a position of strategic importance.

No economic development of sizable magnitude is possible unless there is an adequate degree of capital formation.

The central bank’s quarterly performance review of the banking sector for the quarter of current fiscal year 2017-18 that ended on 31st December said improving asset quality, stable liquidity, robust solvency and slow pick-up in private sector advances were the key developments during the last quarter of CY17.

The asset base of the banking sector had expanded by 4.5 percent during the quarter.

The serious capital deficiency in under-developed countries is reflected in the small amount of capital equipment per worker and in limited knowledge, training and scientific advance.

These are serious handicaps in economic development and here the banks can play a useful role: The role of banks in economic development is to remove the deficiency of capital by stimulating savings and investment.

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