Islamabad, Jan 3: Pakistan’s banking sector demonstrated resilience and robust growth throughout 2024 despite significant macroeconomic and political challenges. High policy rates, increased investments in government securities, and expanding operations underpinned record-breaking profits across most banks.
Key Developments in 2024
Transition to Islamic Banking
A landmark constitutional amendment was passed to eliminate all forms of interest (Riba) by January 1, 2028, signaling a major shift toward Islamic banking. In response, many banks have begun adopting Shariah-compliant systems. The Islamic banking sector reported significant growth, with assets nearing Rs. 10 trillion and deposits reaching Rs. 8 trillion, accompanied by an expansion to over 4,500 branches.
UBL-Silkbank Merger
United Bank Limited (UBL) moved forward with plans to merge with Silkbank through a share swap agreement. While regulatory approvals are pending, the merger aims to strengthen UBL’s market position. However, legal challenges could potentially delay the transaction.
RAAST-BUNA Integration
A Memorandum of Understanding between Pakistan’s banking regulator and the Arab Monetary Fund paved the way for cross-border remittances through the integration of the RAAST and Buna systems. Remittance inflows from Gulf states are projected to exceed $35 billion, further supporting economic stability.
Policy Rate Adjustments
Policy rates peaked at 22% but were reduced to 13% by year-end, promoting economic activity. The banking sector saw record-high deposits of Rs. 31.4 trillion by November, driven by higher returns on savings and government securities investments.
Cybersecurity and New Departments
Meezan Bank’s cyberattack highlighted emerging risks, prompting the State Bank of Pakistan to establish the Cyber Risk Management Department (CRMD). Additionally, the Financial Institutions Resolution Department (FIRD) was launched to manage distressed entities effectively.
SME and Retail Digitization
The central bank introduced measures to double SME financing to Rs. 1.10 trillion by 2029. The RAAST Person-to-Merchant (P2M) system was launched to digitize the retail sector, with a March 2025 integration deadline for e-commerce platforms.
Despite challenges, these initiatives signal a transformative year for Pakistan’s banking sector, focusing on inclusivity, modernization, and resilience.
