Banking Sector of Pakistan:: Definition of Bank: According To Prof - Kent

BANKING SECTOR OF PAKISTAN:
Banks play very important role in the economic life of the nation . A Bank is an
organization. Which deals with money. Its accepts the savings of people and then
these deposits are advanced to other people.
A bank as a matter of fact is just like a heart in the economic structure and the
Capital provided by it is like blood in it. If the blood is not supplied to any organ
then that part would become useless, so if the finance is not provided to
Agricultural sector or industrial sector, it will be destroyed. Different facility
provided by banks works as an incentive to the producer to increase the
production. Many difficulties in the international payments have been over come
and volume of transactions has been increased. Drafts bills of exchange and
letters of credit are very important instruments of the banks. The banks collect
these instruments drawn on banks in other cities or countries and proceeds
according to the accounts of the customer's concerns.
DEFINITION OF BANK:
ACCORDING TO PROF.KENT:
“Bank is an organization whose principle operations

are concerned with the accumulation of the temporarily
idle money of the general public for the purpose of
advancing to other for expenditure”
IMPORTANCE OF BANKING SECTOR:
Following are the main points of banking sector:
Development of trade:
The banks collect the savings of the people and provide them trade activities.
Successful businessmen work in cooperation with the banks.
Development of agriculture:
Banks finance the most important sector of developing economies. short long and
medium term loans are provided in the purchase of seeds, fertilizers, and
machinery.
Educational loans:
Banks provide educational loans. These loans are advances for long period of
time. These loans are called qarz-e-hasna these loans offered to the needy
students who cannot afford their educational expenditures.
Development economy:
A sound banking sector promotes the economic status of the people by providing
them short and long term loans.
Foreign trade:
Banks helps the traders of two different banks to undertake the business.
Collection of dividend:
The banks provide the very useful services of collection of dividend on behalf of
the customers.
Medium of exchange:
By issuing cheques and drafts bank provides cheap medium of exchange.
Development of industry:
The countries which concentrated on industrial sector of made rapid economic

development.
Collection of taxes:
Banks collects taxes on the behalf of the government.
Increasing in saving:
Saving is the essential requisite of economic development of a country. Bank

collects small savings and converts them into huge capital. In this way banks
launches different saving schemes to attract people.
Investment:
Bank is also making investment in different companies. A developed banking

stimulates the growth and capital formation.
Greater customer orientation:
In today’s competitive environment, banks will have to strive to attract and retain
customers by introducing innovative products, enhancing the quality of customer
service and marketing a variety of products through diverse channels targeted at
specific customer groups.
Corporate governance:
Besides using their strengths and strategic initiatives for creating shareholder
value, banks have to be conscious of their responsibilities towards corporate
governance. Following financial liberalization, as the ownership of banks gets
broad based the importance of institutional and individual shareholders will
increase. In such a scenario, banks will need to put in place a code for corporate
governance for benefiting all stakeholders of a corporate entity
International standards:
Introducing internationally followed best practices and observing universally

acceptable standards and codes is necessary for strengthening the domestic
financial architecture. This includes best practices in the area of corporate
governance along with full transparency in disclosures. In today’s globalised
world, focusing on the observance of standards will help smooth integration with
world financial market.
PROBLEMS IN BANKING SECTOR:
Banking is one of the most sensitive businesses all over the world. Banks play very
important role in the economy of a country and Pakistan is no exemption. Banks
are custodian to the assets of the general masses. The banking sector plays a
significant role in a contemporary world of money and economy. It influences and
facilitates many different but integrated economic activities like resources
mobilization, poverty elimination, production and distribution of public finance.
Pakistan has a well-developed banking system, which consists of a wide variety of

institutions ranging from a central bank to commercial banks and to specialized
agencies to cater for special requirements of specific sectors.

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BANKING SECTOR OF PAKISTAN:

“Bank is an organization whose principle operations

IMPORTANCE OF BANKING SECTOR:

Following are the main points of banking sector:

By issuing cheques and drafts bank provides cheap medium of exchange.

The countries which concentrated on industrial sector of made rapid economic

Banks collects taxes on the behalf of the government.

Saving is the essential requisite of economic development of a country. Bank

Bank is also making investment in different companies. A developed banking

Greater customer orientation:

Introducing internationally followed best practices and observing universally

PROBLEMS IN BANKING SECTOR:

Pakistan has a well-developed banking system, which consists of a wide variety of

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