History of banking in Pakistan

Back in 1947 when Pakistan became independent from British rule .The divide meant Pakistan was left without any state or central bank Mohammed ali jannah the founder of Pakistan asked Habib family to shift their Banks Base to Pakistan from Bombay India to Karachi Pakistan.In 1941 Habib family founded The bank serve the banking interest of Islamic community of  Sub-continent after the Advice of Mohammed Ali Jinnah .Pakistan’s Central bank was founded by Mohammed Ali Jinnah in 1948 with the name of State bank of Pakistan .The birth of SBP paved way for new banks like allied bank ,Habib Bank , National Bank of Pakistan grown with strong support by SBP. Commerical banks enjoyed successful  tenure in Pakistan until 1970 when after the partition of west and east .The government by Zulifqar ali Bhutto,his move to Nationalize everything private meant the end of private and commercial banks all banks and entities went into Government ownership .


Just before Bhutto’s move to nationalize the banks ,Hbl opened its branch in colombo becoming first Pakistani bank to operate overseas . Agha Hasan abedi who previously founded Ubl in Pakistan started a new venture ,known as Bank of credit and commerce international (BCCI) Bank setup its head-office in Karachi and London bank became huge success during its tenure reaching 7th private bank in terms of assets and equity .But’s banks lifespan was short due to it’s link to money laundering and other scandals bank was forced to seaze its operation in 1991 ,On the other hands local banking in Pakistan s risen after the departure of Bhutto,Who was hanged to death by Zia-ul-haq who then decided to privatize the banks and other assets .Habib family came back with bank al Habib and Private investors were also encourged to came back into Pakistani banking sector .


Nawaz Sheriff in 1991 started the process of Privatization of pakistani banks ,Muslim commerical bank,Habib bank ,Allied bank were privatized during the process .By the time of 2000 there were about 50 banks operating in Pakistan .Pakistan’s banking sector saw major surge in growth after 2006  due to process of banking reform and restoring Banking companies ordinance of 1962 .Banking sector grown from normal conventional banks to newly formed Micro-finance banks ,despite comming early in 2000,s the reach of the micro banks and other small financial institutions were limited to public,but scenes changed from 2010 .

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The majority of Pakistani public was unable to access normal banking due to demand of colleteral by banks and people below the poverty line were forced take up loans with interest reaching more the money the actually borrowed , Microfinance banks pushed the boundaries of banking in pakistan .Finca ,Tameer microfinance etc are major players in micro lending .The role of Islamic banks such as Meezan bank,Dubai Islami bank also attracted conservative crowd toward credit banking .Banking in Pakistan is aiming for higher modern banking standards .Credit might not be very famous in Pakistan but alternatives provided by fintect firms like easypaisa,simsim is getting public eye day by day .

Habib bank still remains largest and most popular bank in Pakistan with overseas branching operating all around the globe .Hbl is fully private now and owned Agha khan  Mutual fund.

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