SBP governor calls for stronger retail deposit mobilisation and greater private-sector financing as Pakistan moves beyond economic stabilisation.
KARACHI: State Bank of Pakistan (SBP) Governor has urged banks to reshape their business models around stronger retail deposit mobilisation and increased private-sector lending, saying the banking industry has a vital role in supporting Pakistan’s next phase of sustainable economic growth.
Addressing the 11th Pakistan Banking Awards 2026 in Karachi, the governor said Pakistan’s economy had shown resilience despite a challenging FY2025-26, which was marked by severe floods, geopolitical tensions and uncertainty in global trade.
He said inflation had remained close to the medium-term target range, while inflation expectations were broadly anchored. The current account deficit also remained close to the lower end of the projected range.
Foreign exchange reserves continued to rise and had comfortably exceeded the $18 billion end-June target, the governor said. He added that the quality of reserve accumulation had improved as the increase was driven mainly by SBP purchases of foreign exchange rather than debt-based accumulation.
SBP says stabilisation alone cannot ensure growth
The governor said policymakers had successfully achieved the difficult task of economic stabilisation but stressed that stabilisation alone was not enough to place Pakistan on a path of high and sustainable economic growth.
He highlighted the banking sector’s role in financing the country’s next phase of economic development.
The banking industry had demonstrated resilience, with total banking-sector assets reaching Rs69 trillion and deposits standing at Rs43 trillion by the end of June 2026.
Bank profitability also remained strong, while the sector’s Capital Adequacy Ratio stayed comfortably above both international benchmarks and domestic regulatory requirements.
Banks urged to mobilise more retail deposits
The SBP governor said Pakistan had considerable scope to strengthen financial intermediation.
Despite substantial expansion, banking-sector assets and deposits remained relatively low as a share of GDP compared with other emerging markets.
He also highlighted Pakistan’s relatively high currency-to-deposit ratio, saying this pointed to significant room to reduce reliance on cash and expand the formal deposit base.
The governor encouraged banks to compete more actively for retail deposits by offering attractive returns alongside high-quality banking services.
A stronger retail deposit culture would broaden financial inclusion and give banks a more diversified and stable funding base, he said.
Private-sector credit needs to increase
The governor also called for greater bank financing for the private sector, noting that Pakistan’s credit penetration remained significantly below that of comparable emerging economies.
He said the ratio of private-sector bank credit to GDP had declined substantially over the past three decades.
According to the governor, government borrowing requirements alone did not fully explain the trend, as several emerging economies with higher levels of domestic government debt continued to maintain significantly higher private-sector credit-to-GDP ratios.
He therefore urged banks to reorient their business models towards mobilising more deposits and increasing financing to the private sector.
Meezan Bank wins Best Bank award
The 11th Pakistan Banking Awards were organised by NIBAF Pakistan in collaboration with Dawn Media Group and A. F. Ferguson & Co.
The SBP governor praised the organisers for continuing the awards, describing the event as a testament to the longstanding partnership in recognising institutions contributing to the future of Pakistan’s banking sector.
Meezan Bank Limited won the award for Best Bank.
Other awards included:
• Best Bank for Women Inclusion: Bank of Punjab
• Best Microfinance Bank: ASA Microfinance Bank Limited
• Best Bank for Small and Medium Enterprises: Bank of Punjab
• Best Bank for Agriculture Inclusion: Bank of Punjab
• Best Bank for Digital Excellence: Bank Alfalah Limited
• Best Bank for Customer Engagement: Meezan Bank Limited
• Best Mid-Sized Bank: Askari Bank Limited and Faysal Bank Limited
• Best Bank for ESG: HBL
• Best Contribution by Non-Bank Entity: Pakistan Microfinance Investment Company Limited
The awards recognise banks and non-bank financial institutions for their contributions to financial inclusion, digital innovation, customer engagement and broader economic development.