Innovations and Future of Pakistan Banking Industry

INNOVATIONS & FUTURE OF

PAKISTAN BANKING INDUSTRY

Monis ShabbirStudent of Business Administration Sukkur IBA

TABLE OF CONTENTS

• Innovations of Banking System Shadow Banking

Investment banks Mutual funds Leasing companies Modaraba Pension funds

E-Banking Mobile Banking

• Future of Banking System

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

SHADOW BANKING

• Non-bank financial institutions.

• Regulated by Securities and Exchange Commission of Pakistan (SECP).

• They don’t have reserve requirements.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

SHADOW BANKING

• It Includes:–Mutual Funds.– Asset Management Companies.– Investment banks– Leasing companies–Modaraba’s– Pension funds

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

MUTUAL FUNDS

• Collective Investment scheme.• MUFAQ is Association of Mutual funds• Mutual funds have 70% in Shadow Banking.• Examples includes AI Meezan investment

Management Limited, , Askari investment management limited, Faysal asset management limited,Habib asset management limited, HBL asset management limited.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

INVESTMENT BANKS

• Investment Bank is a financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities (or both).

• It’s contribution in NBFI’s Industry is 1.73%.

• Pakistan’s top investment includes Arif habib limited, apna microfinance, dawood equities, Escorts bank, Ist capital securities corp, IGI Investment.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

LEASING COMPANIES

• Leasing Company is the legal owner of the goods, but ownership is effectively conveyed to the lessee, who incurs all benefits, costs, and risks associated with ownership of the assets.

• It contribution in NBFI’s Industry is about 5.7%.• it includes ORIX Leasing Pakistan limited, Saudi Pak

Leasing Co Ltd, Grays leasing limited, Pak Gulf leasing company, English leasing company.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

MODARABA

• Modaraba is a special kind of partnership where one partner gives money to another for investing it in a commercial enterprise.

• Its contribution in NBFI’s sector is 4.56%.

• Modarabas Includes Allied rental modaraba, B.F Modaraba, BRR Guardian modaraba, crescent standard modaraba, first elite capital modaraba, first equity modaraba.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

PENSION FUNDS

• Pension funds is a common asset pool meant to generate stable growth over the long term, and provide pensions for employees when they reach the end of their working years and commence retirement.

• Its contribution in sector is 1.7%.

• Top companies in Pakistan are MCB- arif habib savings, Meezan tahufiz pension fund, UBL pension funds, NBF Fullerton asset Management Company.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

E-BANKING

According to SBP fiscal review 2014-15

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

E-BANKING

According to SBP fiscal review 2014-15

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

MOBILE BANKING

• Its like using mobile phone for financial transactions. In Pakistan 22% of the population have bank accounts but 62% population owns mobile phones.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

FUTURE OF BANKING IN PAKISTAN

• Branchless banking is the future of Pakistan banking industry.

• Characteristics of Branchless banking include: – Less Requirement of Human Capital– Low transaction cost– Low cost of setting up Banking Business– Wide network of service coverage across county– Attracts unbanked and low income segment of Pakistani population– Bank accounts are accessible from anywhere 24/7.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

FUTURE OF BANKING IN PAKISTAN

• It will bring vast amounts of the money that currently circulates in our economy as undocumented cash into a formal payments system and bank accounts.

• The benefits of documentation will yield greater visibility of the transactions that make up our economy, and create the possibility of fine tuning the fiscal architecture to avail the benefits of this visibility.

• Example of Branchless Banking.

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

FUTURE OF BANKING IN PAKISTAN

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

FUTURE OF BANKING IN PAKISTAN

Monis Shabbir Kulachi monis.mb13@iba-suk.edu.pk

THANKS