New steps under COVID-19 hiatus invite challenging situation for banks.

Byline: S. Kamal Hayder Kazmi

Interview with Dr. Ayub Mehar - a renowned economist

PAGE: Tell me something about yourself and your organization, please:

Ayub Mehar: I am serving as 'Professor' in Iqra University Karachi and also 'Economic Advisor' of the Employers' Federation of Pakistan (the largest representative body of the entrepreneurs and investors in Pakistan). Currently, I am also associated with the Asian Development Bank Institute on a project for Infrastructure Financing in CAREC member countries. Development Financing, Macroeconomic Policies, International Trade and Finance and Economic and Financial Modeling are areas of my research interests. I have completed several policy research studies for international financial institutions and think tanks including 'Economic Integration in CAREC Member Countries: Financing Economic Corridors and Sovereign Bonds Market', 'Ineffectiveness of Environmental, Social, and Governance Policies and Incentives: Impact of Generalized Scheme of Preferences Plus on Central Asian and South Asian Countries', 'Impacts of the Patterns of Financing on Logistic Infrastructure in CAREC Member Countries', 'Impacts and Financing Infrastructure Development in Pakistan: Role of CPEC and FDI', 'Infrastructure Development by Liberalizing Economic Policies: The Straight Path of Economic Prosperity', 'Financial Cooperation in South Asia: Recent Development and Challenges', 'Political Economy of Subsidies', 'Magnitude and Determinants of the Flows of Investment among South Asian Countries: Considering Economic Prosperity without Politics' and 'South Asia in New Economic Order: Need of Accelerated Liberalization Process'.

In recognition of my expertise, the Technology Policy and Assessment Center at Georgia Institute of Technology acknowledged membership in the distinguished panel of international experts for Indicators of Technology-based Competitiveness, which is a project of the US National Science Foundation, United States Government.

PAGE: What are your views on the performance of the banking sector during the COVID-19 pandemic in Pakistan?

Ayub Mehar: The commercial banks in Pakistan have shown a rosy picture up to 31st March 2020. The estimated aggregate earnings after tax of all commercial banks was Rs46 billion on 31st March 2020 as compare to Rs39 billion on the same date last year. The aggregate advances of commercial banks have arrived at Rs8.1 trillion on 31st March 2020 from 7.8 trillion on 31st March 2019 showing around 4 percent growth in advances, while the aggregate deposits of commercial banks have arrived at Rs15.9 trillion from Rs14.1 showing 13 percent growth in deposits during the same period. Out of total domestic deposits of all commercial banks around Rs3 trillion are in fixed deposits, Rs6 trillion in saving accounts and Rs5 trillion in current accounts. The aggregate advances to deposit ratio is around 51 percent in Pakistan, which is quite safe and sound. Net Non- performing loans (NPLs) have been recorded at Rs.146 billion on 31st March 2020 as compared to Rs110 billion on 31st March 2020. NPL is much higher in local private banks as compared to the banks in...

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