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We are delighted to introduce our annual Pakistan Banking Perspective 2024 that analyzes the financial results for leading commercial banks across Pakistan, comparing performance against the previous year. This report summarizes information about banking industry performance and provides key insights about emerging industry trends and perspectives.

The Profitability of Banking Sector in Pakistan: An Empirical Analysis from 2006-2010

Science Series Data Report, Vol. 4, No. 2, February 2012

12 Pages Posted: 29 Sep 2012

Imran Naseem

COMSATS Institute of Information Technology (CIIT)

Ambreen Saleem

Comsats University Islamabad

Date Written: February 29, 2012

Banking sector plays an important role in financial stability of an economy. This study investigates the determinants of profitability of banking sector in Pakistan. For this purpose the data of all Pakistani banks were collected for the period of 2006-2010. We examined the relationship between macroeconomics and bank specific characteristics. To investigate the impact of loans, assets, deposits, equity, economic growth, inflation and market capitalization on profitability measures ROE (return on equity) ROA (return on assets) ROCE (return on capital employed)i and NIM (net interest margin) by using POLS (Pooled ordinary least square). The study found both internal and external factors have strong impact on profitability of overall banking sector. We tested their study on our data and sample of 40 Pakistani banks which shows overall economic condition of banking sector in Pakistan.

Keywords: Financial Institutions, Banks, Profitability, ROA, Bank specific variables, Inflation, Pakistan

JEL Classification: G20, G21

Suggested Citation: Suggested Citation

Imran Naseem (Contact Author)

Comsats institute of information technology (ciit) ( email ).

Park Road Chak Shahzad Abbotabad, 22010 Pakistan 0913335216334 (Phone)

Comsats University Islamabad ( email )

Park Road Chak Shahzad Abbotabad, 22010 Pakistan

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Please note you do not have access to teaching notes, mobile-banking adoption: empirical evidence from the banking sector in pakistan.

International Journal of Bank Marketing

ISSN : 0265-2323

Article publication date: 5 September 2018

Issue publication date: 18 September 2018

The purpose of this paper is to study the important factors which help explain consumer intention and use behavior in mobile banking (m-banking) adoption. All constructs of the unified theory of acceptance and use of technology 2 are studied. Non-monetary value is studied through perceived value. Trust and perceived risk are also included to predict intention.

Design/methodology/approach

A questionnaire was utilized to evaluate customer responses on a five-point Likert scale. A convenience sampling technique was used to collect data from a sample of 490 respondents in Pakistan. The data were analyzed using AMOS and SPSS for Cronbach’s α , CR, CMV, AVE, Harmon’s single factor test, correlation and structural equation modeling.

The results of the study show that most of the predictors of intention, including perceived value, performance expectancy, habit, social influence, effort expectancy, hedonic motivation (except for facilitating condition), perceived risk and trust, are significant. All predictors of usage behavior are significant.

Research limitations/implications

A cross-sectional study was conducted due to time constraints.

Practical implications

Bank managers must focus on improving customers’ intentions to use m-banking as well as on providing facilitating conditions to increase its actual use. To boost mobile banking, banks’ management must consider the customers’ habits while designing their m-banking products.

Originality/value

The findings of this paper are not only interesting in terms of boosting m-banking diffusion rate, but also in terms of financial inclusion of the vast majority of mobile users. Further the impact of intention, facilitating condition and habit were checked on actual use behavior since people tend not always to act upon their intentions.

• Bank customers
• Use behaviour

Farah, M.F. , Hasni, M.J.S. and Abbas, A.K. (2018), "Mobile-banking adoption: empirical evidence from the banking sector in Pakistan", International Journal of Bank Marketing , Vol. 36 No. 7, pp. 1386-1413. https://doi.org/10.1108/IJBM-10-2017-0215

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THE ROLE OF MEEZAN BANK IN THE DEVELOPMENT OF ISLAMIC BANKING SECTOR IN PAKISTAN

2015, res publication

The main objective of this study is to analyze the role of banking sector in the economic development of Pakistan particularly the role of Islamic banking and its prospects in the country in future. The Meezan bank emerged as the prime Islamic bank of the country and also played a vital role in the economic growth and development of Pakistan. The process of Meezan Islamic

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The Evolution of Islamic Banking in Pakistan: An Analysis

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Islamic banking offers interest free transactions according to shariah laws. The Role of banking system cannot be denied in modern global economic system. In fact, contemporary conventional banking transactions are totally based on interest. Usurious banking is not allowed in Islam at any cost. Interest is completely prohibited in Islam. Interest is root cause of current socio-economic issues of Pakistan. Islamic banking can play a key role in solving contemporary financial issues. Establishment of Islamic banking is the substitution and solution of current economic crises. Islam is state religion of Pakistan. So, usurious banking cannot be allowed. In 1948, Quaid-e-Azam Muhammad Ali Jinnah clearly declared that western system of banking based on interest would be abolished. But interest-based banking is running still now. Creation of the Council of Islamic Ideology (CII) was created in 1962. The report of the Council of Islamic Ideology (June 1980) on elimination of Interest (Riba) is considered first panoramic work on Islamic banking in the world. Islamic finance foundation “Akhuwat” was founded in 2003 which is working without interest (Riba). It is a practical example of Islamic banking. Various Islamic products like Mudarabah, Musharaka, Murabaha, Ijarah, Salam, Istisna, and Takaful are being offered in banking system. This research study sheds light on only two main Islamic products Musharakah and Mudarabah in Islamic perspective. In this article, the evolution and development of Islamic banking system has been analyzed.

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Global Journal of Management and Business Research

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samra masood

Uzair-ul- Hassan

This study explores the working pattern of Islamic banking by considering its main functions. Islamic banking proved its success to compete with the deep rooted conventional banking system in Pakistan. The Islamic bank performs multiple functions to facilitate the different stakeholder according to their specific needs. Banks pool the funds by accepting deposits from the savers and provide these funds to entrepreneurs for productive ventures to generate profits. It provides interest free products to serve the different segments of the economy according to Shariah principles. The primary function of the Islamic bank is to promote trade activities as an active interaction with Surplus Units and Deficit Units of the economy. The secondary function of Islamic bank aims at provision of agency services and other market compatible products to facilitate its customers. Finally, it also provides consultancy and Hajj services to compete with the conventional banks. This study gives a snapshot of functions performed by Islamic banks in Pakistan. This study is an effort to list out the main functions being performed by the Islamic banks that may guide different segments of the society to understand the working pattern of the Islamic banks in Pakistan.

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Challenges in banking sector of Pakistan

In last few years, banking system in Pakistan has entered into a new phase of evolution yet facing various issues, where political instability and economic uncertainty remain the main problem. On one side, banks are making profits, defaults are on decline and have surplus liquidity in recent years but on the other side, economic conditions in the country have deteriorated in last two years due to political instability. Economic growth is an apt indicator for the growth of the banking sector; Pakistan’s economic expansion has been quite impressive from the perspective of GDP growth rate in last five years and was even highest in last fifteen years. Whereas Pakistan’s banking sector remained sound and stable in 2017, with total assets growing to Rs 18.34 trillion (USD 159.5 billion) from Rs 15.83 trillion in 2016. However, Pakistan’s banking sector profitability declined by three percent to Rs 39 billion in 2QCY18 mainly due to increased expenses incurred by big banks on pension and compliance costs.

Despite a rise in loans due to low interest rates, banks continue to invest large sums into risk-free government securities to bolster their earnings. As per State Bank of Pakistan’s latest issue of “Quarterly Compendium: Banking Statistics”, first tier (1-5), second tier (6-10), third tier (11-20) and fourth tier (21-28) banks in the sector had earnings of 52.1, 26.3, 18.3 and 0.8 percent respectively of the total profits as of June 30, 2018. Whereas foreign banks’ profit from the total pie was 5.5 percent.

Latest earnings reports of Pakistan’s top-five banks have also shown that key financial metrics of National Bank of Pakistan (NBP) have improved markedly and the bank has outpaced its peers in profit growth due to changes in business strategy in the first half of the current calendar year. With most banks facing a significant decline in profit due to various reasons including different provisions and loss in trade business, NBP announced a growth of 46%. However, three of the big five banks saw their after-tax profit go down massively in the same period. It is being said that earnings of top-five banks can be seen as an indicator of the health of Pakistan’s banking system.

Lending ratio to the private sector in Pakistan is less than other South Asian countries, yet banks are making huge profits as compared to the regional countries. As per a newspaper report, returns of Pakistani banks have been around eight percentage higher than regional peers over the last five years. Now the question arises, how the banks are making profits. There are a number of revenue sources for a bank including lending to public and private sector companies both big and small, and procuring government papers, bonds and notes. Investment in government securities are preferred investment opportunities for a bank in Pakistan, which government uses for subsidizing the fiscal deficit.

As a matter of fact, banks are only lending to big companies and business houses and are reluctant to lend to small and medium enterprises which is struggling to raise debt from the market. As per the official statistics of SBP, commercial banks holdings in the government securities slightly rose to Rs 7.372 trillion as on June 30, 2018, compared with Rs 7.363 trillion in the corresponding period last year. Government budgeted Rs 1.0 trillion in borrowings from the banking sector for FY19 and it is expected that this number will be revised upwards due to the ongoing economic scenario and liquidity within the banking sector. State Bank of Pakistan (SBP) has announced to auction Rs 5.15 trillion worth of Market Treasury Bills (MTBs and Pakistan Investment Bonds (PIBs) in September-November 2018 to help the government finance the budget deficit. The SBP would sell Rs 4.850 trillion of three, six, and 12 months debt through T-bills. The central bank also plans to offer Rs 150 billion worth of three, five, ten and twenty-years PIBs.

Banks can only make profits if it is investing (i.e. lending) at a higher interest rates while covering the risk elements and paying less to its depositors, the more the delta the more the profit. Due to various reasons, banks have little incentive to do anything else except to lend to the government which is both risk free and highly remunerative. However, independent economist view this as a dysfunctionality in the financial sector.

It is important that Regulator put a limit on the banks in investing in government securities and lending to small and medium enterprises. This is not an ideal solution but it will force banks to focus on small and medium enterprises which is a life line of Pakistan’s economic growth.

The big disadvantage of state owned banks now is that government has barred them from charging high spread (interest rates) on some of government related doubtful loans thus government tries to keep financial expenses minimum but it impacts the profitability of the banks. In addition, government owned banks do not write off bad loans easily due to fear of inquiry by the National Accountability Bureau (NAB) . There should be an independent committee for investigating the reasons for bad loans and banks should write off loans on the basis of their recommendation only. This can also be out-sourced to some third party financial managers so as to mitigate the risk of inquiries by NAB.

In addition, banks seriously need to improve the corporate governance. We have seen heavy fine on HBL by the US regulatory authorities and numerous fraud and embezzlement cases are also investigated in NBP in recent years. SBP and SECP have to take certain steps in implementing corporate governance in the banks. Whereas banks should also establish procedures for compliance checks. The SBP should take measures to put in place and enforce good governance practices to improve the internal controls and bring about a change in the organizational culture.

In today’s world both internal and external factors affect the banking system which need constant supervision by the regulator. There should be a formal and comprehensive documentation of economy . A very large number of individuals are still not in the banking ambit and operate outside the orbit of banking system. It is very important to bring that segment in the net and banks would be able to attract billions of rupees. Moreover, present government has ambitious plans to construct affordable housing schemes though government has yet to announce the policy framework for housing schemes and house building loans in this area will help government in providing affordable housing to the people.

Regarding the future outlook of the sector, SBP says profitability will depend on the momentum of advances, developments in the foreign-exchange market and performance of the capital market. The Pakistan’s economy is projected to grow at a rate of over 5 percent and the country’s banking industry is expected to reflect this growth. The onus for this lies in the capabilities of SBP as an able central regulatory authority, whose policies have shielded Pakistani banks from excessive leveraging and making high risk investments. The key challenges for the industry are to reduce Non-Performing Assets (NPAs) , increase financial inclusion and raise capital for regulatory compliance.

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CONTRIBUTIONS OF BANKING SECTOR IN ECONOMIC GROWTH : A Case of Pakistan

• D. Aurangzeb
• Published 2012
• Business, Economics

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Fintech and Financial Inclusion in Pakistan: An Exploratory Study

• First Online: 02 July 2020

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• Hassnian Ali 7 &
• Rose Abdullah 8  

Part of the book series: Palgrave Studies in Islamic Banking, Finance, and Economics ((IBFE))

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Fintech has the potential of promoting financial inclusion in terms of secured digital payments, financing, InsureTech, and investments through crowdfunding and P2P lending to unserved or less served businesses, start-ups, and segments of the population. Fintech is deployed using the latest technologies such as big data analytics, clouds, Internet of Things, blockchain, and artificial intelligence to provide highly secured, instant, easy-to-access, easy-to-use, low-cost, and finally more customer-centric financial services and products. For Fintech to boost Islamic financial inclusion, shariah compatibility in the applications is necessary. Empirical evidence shows that Pakistan is a highly financially exclusive country. This study provides an overview of financial inclusion and digital finance status in Pakistan, a comparative analysis of information and communication technologies (ICT) environment, and Pakistan’s performance in ICTs. This study elucidates the potential of Fintech applications and proposes a pragmatic scheme to develop a Fintech ecosystem capable of achieving the goal of financial inclusion in Pakistan.

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Ali, H., Abdullah, R. (2020). Fintech and Financial Inclusion in Pakistan: An Exploratory Study. In: Elzahi Saaid Ali, A., Ali, K., Khaleequzzaman, M. (eds) Enhancing Financial Inclusion through Islamic Finance, Volume I. Palgrave Studies in Islamic Banking, Finance, and Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-39935-1_9

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Banking industry in pakistan

Industry overview, banking industry in pakistan.

Under the supervising of the State Bank of Pakistan, all Bankss work. State bank of Pakistan divided the operations of the Bankss into four chief sections which is Corporate, agribusiness, SME and consumer. All those Bankss which operate in Pakistan should follow the ordinance made by the province bank of Pakistan. SBP give ordinances harmonizing to which Bankss supposed to work and invariably maintain a tract that Bankss are running harmonizing to the ordinances or non.

Pakistan is on figure sixth in the universe being a thickly settled province, In Asia its figure 4th and in SAARC states it ‘s the 2nd one, holding population of 160 Million or more in which 100 Million is under the age of 25 old ages and a strong in-between category of 30 Million basking a batch of benefits from consumer funding.

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Banking sector has undergone an of import redevelopment in the recent old ages and performed as a medium in the Restoration of the economic system. In the last 7-8 old ages, excessively much amalgamation, acquisitions and denationalization have made which starts from Muslim commercial bank which was privatized and so Allied bank, Habib bank and United bank from clip to clip privatized. In those old ages Standard chartered acquired Union bank and ABN Amro acquired Prime bank. All these show a immense foreign investing, better and increase public presentation of banking sector through which they can derive more market portion and immense paid up capital which is the necessary demand of SBP in lesser clip. By the terminal of 2009 it is 6 billion and that was 1 billion in twelvemonth 2000.

Pakistan banking sector is chiefly dominated by 5 big commercial Bankss. Foreign Bankss are besides in parallel operations but their chief focal point is merely on immense transnational clients. In 1991, local Bankss got permitted to be formed and now there are 30 such type of Bankss which are functioning merely little to medium because of less capital in comparing to foreign Bankss.

Pakistan fiscal sector is highly developed holding 12 private, 4 public and 21 commercial Bankss, common financess, renting companies, DFI and besides Islamic venture capital. Over 1 trillion rupees of assets commercial Bankss have in which domestic Bankss about holding 80 per centum.

Banks runing in Pakistan

From 1997 boulder clay june-2008, Pakistan has a sum of 39 Bankss in which local private Bankss are 25, other private Bankss are 8 and foreign Bankss are 6 in figure. In 2007 this figure was 40 but due to acquisition of one local private with foreign bank it decrease to 39.

Statistical-table ( SBP, 2008 )

Due to an excess ordinary growing and enlargement in banking system of Pakistan from the last 10 old ages, it generate immense sum of net income and lend a batch to the economic system of Pakistan. The following tabular array shows its growing from twelvemonth 2000 till the 2nd one-fourth of twelvemonth 2008.

The cardinal bank of Pakistan ( SBP )

The foundation papers of the cardinal bank of Pakistan named the province bank of Pakistan order 1948, remained basically unchanged until 1 Jan, 1974. The province bank of Pakistan act 1956, with wining amendments, laid the foundation of its operations today. The cardinal bank caput one-fourth is in Karachi.

The cardinal bank farther looks into a package of different scopes of banking to treat/manage with the alterations in economic environment and diverse buying and purchasing powers. Here are some of the banking countries that the cardinal bank looks into ;

• Banking sector supervising in Pakistan
• Micro finance
• Small and medium endeavors ( SMEs )
• Minimum capital demands for Bankss
• Remittance installations in Pakistan
• Handbook of corporate administration
• Guidelines on hazard Risk direction
• Guidelines on securitization
• Procedure for subjecting claims with SBP in regard of unclaimed sedimentations surrendered by Bankss / DFI ‘s.

There are many other countries of banking to which cardinal bank expressions but the above are the chief countries. The caput of the cardinal bank of Pakistan is Governor who is appointed by the authorities of Pakistan for its mentioned clip.

Consumer banking in Pakistan

Consumer banking is the highest turning sectors of Pakistan banking concern and now the chief involvement topographic point for the Bankss. Chiefly the consumer banking section was merely identify by the foreign Bankss but its effectivity and success attracted others to come towards this country of concern but still the chief portion of consumer banking is in the clasp of foreign Bankss in Pakistan.

In a wide sense, institutional planning that provide consumers with funding aid to better their ingestion and as a consequence thereof, better their criterions of external respiration should fall within the broad definition of consumer finance as an action.

Consumer banking is a huge industry with immense net incomes, tremendous potency for bettering economic state of affairs. But the banking section has to care excess for its endorsers instead than entirely refering itself. It desires to offer improved services at better conditions and demands to update the consumers wholly and to the full about the services.

Harmonizing to the survey, recognition cards loans have enlarged its sum from 33.538 billion rupees to 42.822 billion rupees through the first half of the calendar twelvemonth 2006-07. Personal loans besides increased its sum from 120.517 billion in agenda twelvemonth 2006 to 142.373 billion in twelvemonth 2007. Auto loans enlargement is besides really much impressive. Its addition value is recorded as 105.444 billion from 97.777 billion. With all this lodging loans have every bit good increases 11 billion in its worth from the last twelvemonth.

The province of Pakistan ‘s economic system ( 2004 )

As we can see in the above pie graph, that there is immense growing in consumer finance merchandises and services. The in-between category peoples who can non purchase luxury merchandises in a one spell so they can easy buy it through consumer finance and can populate a happy life. Through consumer finance the life criterions of the people of Pakistan is become good and high.

Here now the research worker briefly explains the major merchandises and services of consumer banking through with the aid of secondary informations.

Car loans are the obtaining of used or trade name new, local or imported autos for private or public usage. Auto funding and car leasing installations together are offered by the bulk of the Bankss. Salaried individuals, professionals, self employed, business communities and others who meet the commissariats and conditions of the bank to run into the standards for the finance or qualified for the loan. Some Bankss are every bit good offers together variable rate and fixed rate options for car loans. The normal market rate for car loans is 14-16 % but its compounding involvement.

The loans taken for buying, edifice or renovating of house is come under place loans. In Pakistan place loans are offered on fixed rate every bit good as on variable rate. The extreme period offered by the Bankss for place loans is normally 20 old ages that ‘s why Bankss appropriately give loans to lasting workers of any house to vouch repayment ability.

• Personal loans

Personal loans are normally unbarred sort of loans but in certain instances when the amount of personal loans increases the standard bound its staying portion must be protected. Personal loans contain loans for the ground of instruction, matrimony, going, purchase of consumer merchandises, trappings, etc. normally the bound for personal loans is 500,000 Pakistani rupees.

Credit-debt cards

Recognition cards merely intend cards which permit a client to make payments on recognition. Auxiliary recognition cards are measured to be the portion of the rule recognition card. Originally merely foreign Bankss are offering recognition cards in Pakistan but now legion local Bankss is besides supplying recognition card installation. Credit card is covered via three webs Master Card, VISA, and American express.

Debit cards are provided to account holders of every bank in Pakistan about all the Bankss are giving debit card installation. The amount used by the debit card holder is squarely debited from the sum of the card holder. Debit cards are received at all ORIX webs in Pakistan and it can moreover be used as ATM cards which are covered by MNET web and I-link and in Pakistan

Deposit history

All the commercial Bankss are supplying different types of sedimentation histories. These histories are in different scopes from client to client to make full up the demand of each type of client. Some of these histories provide high involvement whereas some wage low involvement and few do n’t pay any involvement. several cardinal classs of sedimentation histories are:

• Term deposits histories
• Foreign histories
• Current histories
• Salvaging histories
• Business histories

Wealth direction

Wealth direction is a latest assortment of service late introduced in consumer banking section. It covers every facets of bank ‘s client to procure their hereafter ; it includes fiscal consultancy, insurance, investings programs, revenue enhancement advisory, etc. although wealth direction service are largely supplying by few Bankss merely because this a fresh service still bank ‘s clients do n’t hold thought at all about the wealth direction.

Approximately all the Bankss are supplying insurance services to a few of their clients but the thought of wealth direction is non behind it.

To ease its clients, every bank whether local or foreign is offering services of high technological e-banking. These e-banking services allow the Bankss clients to transport out many banking activities without trouble and any limitation of clip and topographic point. Some of the chief e-banking services offering by the Bankss are:

• Telephone banking
• Plastic banking
• Internet banking
• Mobile banking
• Online banking
• Standard atmosphere

SBP prudential ordinance for consumer Financing

The development in the banking section has been non merely in footings of plus enlargement and profitableness but in add-on, in footings of variegation of merchandises every bit good as hazard profile. Approximately all commercial bank now supplying consumer funding merchandises and services in Pakistan, so for this purpose effectual ordinance is must for the consumer banking. In twelvemonth 2003 State bank of Pakistan provided first edition of prudential ordinances in Pakistan for consumer funding.

The SBP in treatment with the Pakistan Banking Association ( PBA ) every bit good as other stakeholders has made a proper new set of ordinances which cater to the definite separate demands of consumer, corporate and SME funding. The prudential ordinances will ease the Bankss to enlarge their capacity of loaning and client outreach.

Consumer funding means any funding permitted to persons for carry throughing their household, personal or family desires. The State Bank of Pakistan has separated the funding for consumer in its prudential ordinances into four key countries which are ;

Recognition cards

• The Bankss / DFIs should acquire reasonable stairss to fulfill themselves that cardholders have got the cards, whether it is personally or by mail.
• Banks / DFIs shall give to the recognition card holders, the study of history at monthly footing / intervals.
• Banks / DFIs shall be lawfully responsible for all traffics non approved by the recognition card holders after they have been suitably provided with a notice that the card has been misplaced / stolen. However, the Bankss / DFIs answerability shall be restricted to those sum falsely charged to the recognition card holder ‘s bank history.
• Due day of the month for payment should be specifically provided on the histories statement.
• Maximal unbarred bound beneath recognition card to the borrower ( auxiliary cards shall be considered component of the rule borrower ) shall in general non exceed Rs. 500,000/ .
• Banks / DFIs may, nevertheless, allocate a clean bound beyond Rs. 500,000 but non in surplus of Rs. 2 million to their most of import clients who have astonishing strong refund capableness, moderate debt burden and clean path grounds.
• Banks / DFIs may besides allow financing under the recognition card system in surplus of Rs 500,000/- ( up to Rs 2 million ) to farther clients every bit good, provided that extra sum is decently secured.
• Banks / DFIs shall find the lodging finance bound, both in urban and rural countries, in conformity with their inter recognition policy, recognition worthiness and loan refund capacity of the borrowers.
• Banks / DFIs shall guarantee that the entire monthly amortisation payments of consumer loans, inclusive of lodging loans, should non transcend 50 % of the net disposable income of the prospective borrower.
• The loaning bank / DFIs will guarantee that the loan sum is utilized purely for the building intent and loan is disbursed in trenches as per building agenda, loans against the security of bing land / secret plan, or for the purchase of new piece of land / secret plan, for commercial and industrial intents may be allowed.
• The lodging finance installation shall be provided at a maximal debt-equity ratio of 85:15.
• Banks / DFIs are free to widen mortgage loans for lodging for a period non transcending twenty old ages.
• The house financed by the bank / DFI shall be mortgaged in bank ‘s / DFI ‘s favour by manner of just or registered mortgage.
• Banks / DFIs shall either prosecute professional expertness or arrange sufficient preparation for their concerned functionaries to measure the belongings, measure the genuineness and unity of the rubric paperss.
• The bank ‘s / DFI ‘s direction should set in topographic point a mechanism to supervise conditions in the existent estate market ( or other merchandise market ) at least on quarterly footing to guarantee that is its policies are aligned to current market conditions.
• Banks / DFIs are motivated to develop drifting rate goods for lodging finance, thereby administrating involvement rate hazard to manage / avoid its inauspicious effects.
• The vehicles to be utilized for commercial intents shall non be covered under the prudential ordinances for consumer funding.
• The maximal term of office of the car loan finance shall non transcend seven old ages.
• While leting car loans, the Bankss / DFIs shall guarantee that the minimal down payment does non fall below 10 of the value of vehicle.
• In add-on to any other security agreement on the discretion of the Bankss / DFIs, the vehicles financed by the Bankss / DFIs shall be decently secured by manner of hypothecation.
• The Bankss / DFIs shall vouch that the vehicle is accurately insured at all times during the term of the loan.
• The Bankss / DFIs wishful of financing the purchase of used autos shall fix unvarying guidelines for finding the value of the used vehicles. However, in no instance the bank / DFI shall finance the autos older than five old ages.
• The Bankss / DFIs should guarantee that a good figure of authorised car traders are placed at their panel to extinguish the opportunity of collusion or other unethical patterns.

Personal loan

• The boundary per individual for single / personal loans will normally non transcend Rs 500,000/- .
• Banks / DFIs can apportion a clean edge beyond Rs 500,000, but non in excess of Rs 2 million to their most of import clients who have amazing strong refund capableness, moderate debt weight and a clean path record.

In instances, where the loans has been extended to buy some lasting goods / points, including personal computing machines and accoutrements thereof, the same will be hypothecated with the bank / DFI besides other securities, which the bank? DFI may necessitate on it ‘s on.

In instance of running finance / go arounding finance, it shall be ensured that at least 15 % of the highest use of the loan through the twelvemonth is cleaned up by the borrower for minimal period of one hebdomad.

With all these ordinances cardinal bank of Pakistan convey some alterations to it, which is provided to the Bankss and DFIs to further plants under these amendments or alterations. And these alterations are made by the banking policy and ordinances section of the province bank of Pakistan. Last clip it was updated on 31st January, 2009.

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Noreen, U.; Shafique, A.; Ahmed, Z.; Ashfaq, M. Banking 4.0: Artificial Intelligence (AI) in Banking Industry & Consumer’s Perspective. Sustainability 2023 , 15 , 3682. https://doi.org/10.3390/su15043682

Noreen U, Shafique A, Ahmed Z, Ashfaq M. Banking 4.0: Artificial Intelligence (AI) in Banking Industry & Consumer’s Perspective. Sustainability . 2023; 15(4):3682. https://doi.org/10.3390/su15043682

Noreen, Umara, Attayah Shafique, Zaheer Ahmed, and Muhammad Ashfaq. 2023. "Banking 4.0: Artificial Intelligence (AI) in Banking Industry & Consumer’s Perspective" Sustainability 15, no. 4: 3682. https://doi.org/10.3390/su15043682

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The World Bank In Pakistan

Pakistan has important strategic endowments and development potential. The increasing proportion of Pakistan’s youth provides the country with a potential demographic dividend and a challenge to provide adequate services and employment.

Poverty reduction has slowed amid recent shocks, as economic growth has remained volatile and slow. Pakistan made significant progress towards reducing poverty between 2001 and 2018 with the expansion of off-farm economic opportunities and increased inflow of remittances. However, rapid poverty reduction has not fully translated into improved socio-economic conditions, as human capital outcomes have remained poor, with high levels of stunting at 38 percent and learning poverty at 78 percent. Critical constraints, including persistent fiscal and current account deficits, protectionist trade policies, unproductive agriculture, a difficult business environment, a heavy state presence in the economy, and a financially unsustainable energy sector, have remained unaddressed, leading to slow and volatile growth. Progress with poverty reduction has recently slowed amid macroeconomic instability, the COVID-19 pandemic, and the catastrophic 2022 floods. The estimated lower-middle income poverty rate is 40.1 percent (US$3.65/day 2017 PPP) for the year 2023-24, virtually the same as the poverty rate in 2018, but with 7 million more Pakistanis living below the poverty line.

Pakistan experienced heavy monsoon rains in 2022 leading to catastrophic and unprecedented flooding with enormous human and economic impacts. Roughly 33 million people were impacted, and many permanently displaced. More than 13,000 kilometers of roads were destroyed, 2.2 million houses damaged, around 3.8 million hectares of crops were flooded, and an estimated 1.2 million livestock were killed. Limited access to input and output markets and temporary disruptions to supply chains subsequently drove up food prices and added to existing price pressures resulting from reduced agricultural yields and the global rise of food prices. The Government’s Post-Disaster Needs Assessment estimated that the need for rehabilitation and reconstruction is at US$16.3 billion.

Pakistan has made recent progress towards macroeconomic stabilization, but risks remain extremely high and faster growth will require substantial reform. Real GDP growth contracted by 0.2 percent y-o-y in fiscal year FY23, after growing by 6.2 percent in FY22 and 5.8 percent in FY21. Accumulated economic imbalances, including high fiscal deficits and increasing debt, depleted Pakistan’s policy buffers resulting in high vulnerability to the catastrophic floods, high world commodity prices, and tight global financing conditions. Repeated delays in implementing the International Monetary Fund (IMF) Extended Fund Facility (EFF) program and the associated decline in external financing inflows saw foreign reserves fall to critically low levels, amid high inflation and sharp currency depreciation. Following the expiry of the incomplete EFF program, a nine-month Stand-By Arrangement (SBA) was approved by the IMF, with staff level agreement reached on its final review in March 2024. Under the SBA, exchange rate flexibility was restored, import controls were eased with some recovery in foreign exchange reserves and economic growth, and new measures were introduced to contain the FY24 fiscal deficit. Nonetheless, risks remain high. Short-term stability depends on remaining on track with the SBA, continued fiscal restraint, and new external financing inflows. Robust economic recovery over the medium term will require the steadfast implementation of much broader fiscal and economic reforms.

Economic activity is expected to remain subdued, with real GDP growth estimated at 1.8 percent in FY24, reflecting continued tight macroeconomic policy, import controls, high inflation, and continued policy uncertainty. Output growth is expected to increase to around 2.5 percent over FY25-26, remaining below potential. Poverty reduction is projected to stall with the poverty rate at around 40 percent in the medium term, owing to weak growth, limited increase in real labor incomes, and persistently high food and energy inflation. Inflation is projected to remain elevated at 26.0 percent in FY24 due to higher domestic energy prices, with little respite for poor and vulnerable households with depleted savings and lower real incomes. With high base effects and lower projected global commodity prices, inflation is expected to moderate over the medium-term. With continued import controls, the CAD is expected to remain low at 0.7 percent of GDP in FY24 and to further narrow to 0.6 percent of GDP in FY25 and FY26. The fiscal deficit is projected to widen to 8.0 percent of GDP due to higher interest payments but gradually decline as fiscal consolidation takes hold and interest payments fall over time.

The Government continues to face a challenging macroeconomic environment while maintaining progress towards macroeconomic stabilization and critical structural reforms. Significant downside risks include: i) policy uncertainty, which may undermine a coherent and timely policy response; ii) worsening external conditions, including unforeseen increases in global commodity prices and interest rates; and iii) risks associated with large domestic and external financing needs, especially in the context banking sector liquidity constraints. To manage these risks, it will be critical to adhere to sound overall economic management and buttress market sentiment, including through articulating and effectively implementing a clear strategy for economic recovery; constraining fiscal expenditures to the extent possible and carefully targeting any new expenditures; maintaining a tight monetary stance and flexible exchange rate; and remaining on-track with critical structural reforms, including those in the energy sector.

Last Updated: Apr 02, 2024

The  Country Partnership Strategy  (CPS) for Pakistan for FY2015-20 is structured to help the country tackle the most difficult—but potentially transformational—areas to reach the twin goals of poverty reduction and shared prosperity.

The Pakistan team continues to engage with stakeholders on the next Country Partnership Framework (CPF). The CPF will draw from several analytical works, including Pakistan Systematic Country Diagnostic: Leveling the Playing Field , and the recently published Country Climate Development Report and Country Economic Memorandum .

The four results areas of the current CPS are:

Transforming the energy sector:  WBG interventions are supporting improved performance of the energy sector by supporting reforms and investments in the power sector to reduce load shedding, expand low-cost generation supply, improve transmission, improve governance and cut losses.

Supporting private sector development:  A mix of budget support, investments and analytical work supports improvements in Pakistan’s investment climate, in overall competitiveness, agricultural markets and productivity, and skills development. 

Reaching out to the underserved, neglected, and poor:  Investments support financial inclusion, micro, small and medium enterprises (MSMEs), women and youth (including through enrollment outcomes), fragile provinces/regions and poorer districts, social protection, and resilience and adaptation to the impact of climate change.

Accelerating improvements in service delivery:  At the federal and provincial levels the Bank supports increasing revenues to fund services and setting more ambitious stretch targets for areas that are not producing change fast enough (especially education and health). At a provincial level, this involves support to better service delivery in cities.

Cross cutting themes for the program include women’s economic empowerment, climate change and resilience, and regional economic connectivity.The WBG has fourth-largest portfolio of $14.7 billion in Pakistan ($10.7bn IDA, $3.8bn IBRD, $0.2mn in Trust funds and co-financings). The portfolio is supporting reforms and investments to strengthen institutions, particularly in fiscal management and human development. Partnerships are being strengthened at provincial levels, focusing on multi-sectoral initiatives in areas such as children's nutrition, education and skills, irrigated agriculture, tourism, disaster risk management, and urban development. Clean energy, and social/financial inclusion, both remain major priorities.

ENHANCING DISASTER RESILIENCE

Being one of the most vulnerable countries to climate change Pakistan is recurrently affected by catastrophes, including the unprecedented 2022 floods which affected an estimated 33 million people and resulted in US$14.9 billion in damages and US$15.2 billion in economic losses . Pakistan’s economy continues to suffer chronic strain from prevailing and likely future threats of hazards. Since the 2005 Pakistan earthquake, which led to nearly 73,000 deaths and caused damages to over 570,000 houses, the Bank has been supporting the Government of Pakistan in shifting to an anticipatory risk management approach. Initially, the Bank provided technical assistance to the government to highlight physical and fiscal risks from hazards, including risk assessments of federal and provincial capitals. In parallel, the Bank also used grant resources to build the capacity of Provincial Disaster Management Authority of Balochistan.

Following the floods of 2014, at the request of Government of Pakistan, the World Bank prepared the US$125 million IDA-funded Disaster and Climate Resilience Improvement Project (DCRIP) to support the restoration of flood protection infrastructure and strengthen government capacity to manage disasters and climate variability in Punjab. The project was successfully concluded in November 2021,achieving its intended development objectives and surpassing the targets for several key results indicators. DCRIP directly benefitted more than 8 million people, half of which are women. The project also repurposed US$7 million to support the Government of Punjab in the pandemic emergency response through procurement of personal protection and healthcare equipment.

In 2016, the Bank also prepared and delivered the US$100 million IDA-funded  Sindh Resilience Project  (SRP) to mitigate flood and drought risks in selected areas, and strengthen Government of Sindh's capacity to manage natural disasters. About 5.75 million people across the province have benefitted from project interventions till date. The drought mitigation component of the project, comprising construction of small groundwater recharge dams, has already started generating strong development impacts for the target communities. In 2021, the Bank approved an additional financing of US$200 million to scale up the small groundwater recharge dams component and set up an emergency rescue service for Sindh.

The Bank has also prepared and delivered the US$188 million IDA-funded Pakistan Hydromet and Climate Services Project which aims to strengthen Pakistan’s public-sector delivery of reliable and timely hydro-meteorological services and enhance community resilience to shocks. The Contingent Emergency Response Component (CERC) was activated under this project to disburse US$150 million in response to the 2022 floods to provide cash assistance to 1.3 million flood affected families.

Furthermore, as part of comprehensive emergency response and rehabilitation support for 2022 floods, the Bank delivered two emergency projects for the province of Sindh, which was disproportionately affected by the catastrophe. The US$500 million IDA-funded Sindh Flood Emergency Rehabilitation Project aims to rehabilitate damaged infrastructure and provide short-term livelihood opportunities through cash-for-work in selected areas of Sindh affected by the 2022 floods. The project will also strengthen the capacity of the Government of Sindh to respond to the impacts of climate change and natural hazards through expansion of the Sindh Emergency Rescue Service (Rescue 1122) and enhancing the preparedness of relevant line departments. The Project is expected to benefit 2 million people through rehabilitated infrastructure while short term livelihood support will be provided to 100,000 households.

Similarly, the IDA-funded US$500 million Sindh Flood Emergency Housing Reconstruction Project aims to deliver beneficiary-driven, multi-hazard resilient reconstruction of core housing units damaged or destroyed in the floods of 2022 in selected districts of Sindh. The Project will support the provision of an estimated 350,000 housing subsidy cash grants and strengthen the capacity of the Government of Sindh by providing technical assistance for the overall housing reconstruction program.

The flood emergency response projects have made satisfactory progress till date. US$ 160 million has been utilized for infrastructure rehabilitation, benefitting more than 3 million people, and about US$100 million has been committed for tranche-based cash grants for housing support to 160,000 beneficiaries.  Efforts are ongoing to ensure the inclusion of eligible beneficiaries and putting emphasis on infrastructure resilience in design standards, which represent important steps towards enhancing overall resilience and building back better.

The Bank has also launched the Country Climate and Development Report (CCDR) for Pakistan. The Pakistan CCDR provides analyses and policy recommendations on harmonizing efforts to achieve further economic growth and lower poverty rates, on the one hand, with the pursuit of a climate-resilient, low-carbon, and equitable development path, on the other. In light of the devastating 2022 heatwaves and floods and the country’s vulnerability profile, the CCDR strongly emphasizes the need to build long-term resilience. Further, it explores pathways for Pakistan to achieve deep decarbonization by 2050, and eventually reach net-zero emissions by 2070 without undermining its development ambitions.

Pakistan has made progress in mainstreaming the Sustainable Development Goals (SDGs) in national policies and strategies, however, there is a slow progress in improving health outcomes. According to the maternal mortality survey in 2019 [1], the country’s maternal mortality ratio  was 186 deaths per 100,000 live births down from 276/100,000 live births in 2006-07. Large gaps exist across provinces with Sindh and Balochistan having twice the number of maternal deaths as compared to the national average. The country also has one of the highest infant and under-5 mortalities in the region (62 and 74 deaths per 1,000 live births, respectively). Twenty-two percent of the children born have low birth weight with variations across provinces.

On average, access to quality reproductive, maternal, newborn, child, and adolescent health with nutrition services in Pakistan is inadequate, with regional disparities. About 49 percent [2] of pregnant women do not receive the recommended four or more anti-natal care (ANC) visits essential for a safe and healthy pregnancy outcome. With 33.8 percent of births outside of health facilities, the risk of maternal and infant mortality and morbidity is high. 42 percent of women of reproductive age in Pakistan have anemia due to poor nutrition. At 3.6 births per woman [3], Pakistan’s fertility rate is still relatively high, and except for Punjab, adolescent fertility has increased, and modern contraceptive prevalence rate (mCPR) has been low in the last decade at 25 percent. High fertility rate and teenage pregnancies contribute to poor maternal and child health outcomes which pose risks of death and illness.  Poor health affects all facets of women’s lives including delayed development milestones, education, learning skills and gainfully participating in the labor force.

Stunting rates for children under age 5 have dropped from 45% to 40.2% from 2013 to 2018 [4]. However, it is still high and large disparities exist among provinces. This prevalence varies from 36.4% in Punjab to 46.6% in Balochistan. The average annual rate of reduction since the last 2018 National Nutrition Survey has been estimated at only 0.5 percent, which is frighteningly slow to reach the national targets. Although the situation is worse in rural and poor households, more than 20 percent of under-5 children in the wealthiest income quintile are also stunted, meaning poverty is not the only driver of stunting.

Immunization coverage for children aged 12-23 months, increased considerably over the past 8-9 years from 54% in 2013 to 77% in 2022. In Punjab 89.5% of children are fully immunized while in Khyber Pakhtunkhwa, Sindh and Balochistan 60.5%, 68%, and 37.9% are respectively fully vaccinated [5].

The World Bank has been supporting the health sector in Pakistan through national and provincial projects. The “National Health Support Program”, approved in Fiscal Year 2023, supports the strengthening of equitable delivery and quality of essential health services at the primary level and the “Sindh Integrated Health and Population Project”, approved in Fiscal Year 2023, supports to improve quality health services in selected areas and restore and rehabilitate healthcare services impacted by floods. The “Punjab Family Planning Program” is aimed to improve modern contraceptive prevalence rate (mCPR) while simultaneously tackling the knowledge and cultural barriers that hinder access to family planning services in the province. Provincial “Human Capital Investment projects” are being implemented in Balochistan, Punjab and Khyber Pakhtunkhwa with the aim to improve utilization of quality health targeted and social services to the poor and vulnerable population.

The World Bank also invests in analytical work through “Programmatic Advisory Services and Analytics (PASA)”, aiming to generate evidence for reforms and provide technical support to the federal and provincial governments in implementing Universal Health Coverage in Pakistan. Additionally, the Bank is working with the Government of Pakistan, through analytics to build capacity of the country stakeholders of the human and animal sectors on health emergency preparedness and response from a one-health perspective.  The Bank is also developing thorough and comprehensive analyses on nutrition that will contribute to the development of a nation-wide program to accelerate stunting reduction in under-five children in pursuit of accumulating human capital in Pakistan.

Sources: [1] Pakistan Maternal Mortality Survey 2019; [2] Universal Health Coverage Index 2023; [3] Demographic and Health Survey 2018; [4] National Nutrition Survey 2018; [5] Third-Party Verification Immunization Coverage Survey Round Two 2022.

Actions to Strengthen Performance for Inclusive and Response Education (ASPIRE) is a 5-year US$200 million program that became effective in August 2020. The program is aimed at enhanced targeting of COVID-19 education response, generating improved learning opportunities for out-of-school children (OOSC) and at-risk students, and enabling stronger federal-provincial coordination and management. To date, the Ministry of Federal Education and Professional Training (MoFEPT) and the provincial education departments have achieved four Disbursement-Linked Results (DLR): adoption of National School Health and Safety Protocols, approval of National Education Response and Resilience Plan, provision of distance learning kits to 50,000 students across the country, and provision of hygiene and cleaning kits to 20,000 public schools nationwide. The activities planned in in FY23 mostly focused on construction and rehabilitation, communication campaigns, teachers training, multi-modal programs, and specific intervention related to Out of School Children (OOSC). The ASPIRE program has also been successful at leveraging the Inter-Provincial Education Ministerial Conference (IPEMC) and the Technical Steering Committee (TSC) platforms for improved coordination between the Federal and Provincial Education Departments.

Pandemic Response Effectiveness in Pakistan project (PREP) , initiated in April 2020, was closed in June 2023. Different donor organizations extended their support in the form of grants and loans to overcome the pandemic situation all over the world, especially to support the education sector. PREP was a USD187 million project of which USD17 million is the education component. The education component introduced distance-learning activities and the development and implementation of plans to ensure the continuity of learning including remote learning options, at all levels of education. These included TV /radio broadcasts, virtual networks of teachers, and other means of distance delivery of academic content at primary, secondary and higher secondary levels. The key activities that are being procured under PREP included: i) Teleschool initiative through Allama Iqbal Open University (AIOU), ii) Content procurement for Teleschool, iii) Strengthening of E-Taleem portal including Virtual Teacher Training (VTT) and Learning Management System (LMS) modules, iv) Development of VTT Training Modules/Courses v) Smart classrooms vi) Procurement and distribution of hand-held devices vii) Communication campaign viii) School on wheels, and ix) the monitoring and evaluation activities.

Data and Research in Education (DARE) is a US$10 million Bank Executed Trust Fund (BETF) provided by the Foreign, Commonwealth & Development Office alongside the ASPIRE program. The project supports Pakistan education sector’s response and recovery by providing technical assistance to the Federal Government, in order to strengthen the education data infrastructure and coordination mechanisms between the federal and provincial governments, enhance evidence-based decision making and improve targeting of programs to reduce inequality and gender-gap. The main components under DARE include strengthening the provincial-Federal education data management processes, enhancing sector coordination on student learning outcomes and improvement of sector monitoring, evaluation and decision making by supporting policy research and impact evaluations.

COVID 19 Response, Recovery, and Resilience in Education Project (RRREP)  - a Global Partnership for Education funded grant of US$19.85 million was successfully closed in November 2022. The project ensured learning continuity through a) broadcasting the digital content on National TV and Radio which reached around 2.7 million children across 58 lagging districts in Pakistan; b) contributed to the evolving EdTech ecosystem at the Federal level by enhancing the Ministry’s digital content library (6000 lessons for grades K-12) and mapping them to the National and Provincial Student Learning Outcomes; and c)  providing adequate infrastructure for the delivery of digital content. Moreover, to ensure safe school reopening post COVID-19, around 1.8 million children in over 12,000 primary schools received sanitizing and hygiene kits, as well as learning materials to lower barriers for re-enrollment and attendance. The Bank has also supported the government’s communication campaign on safe school practices as well as re-enrolment campaigns to encourage families to send their children back to schools once schools re-opened. The project also supported National strategic policy dialogue on strategies to mainstream Out of School Children (OOSC).

Under the 5-year Higher Education Development in Pakistan (HEDP) the World Bank supports research excellence in strategic sectors of the economy, improved teaching and learning and strengthened governance in the higher education sector. The project has been successful in bringing some key reforms in the sector, including: introduction of an Undergraduate Education Policy which established the criteria for Associate Degree and transition of all Bachelor’s Degree programs from two-years to four-years; research capacity development by providing competitive research, innovation, and commercialization grants, such as the Rapid Research Grants, for research on critical COVID-19 related topics and Innovative Seed Fund to support startups and entrepreneurs; expansion of digital connectivity and remote learning systems to ensure continuity of education during COVID-19 and capacity building trainings of faculty, especially females under the newly established National Academy for Higher Education.

The World Bank supported Punjab with an reform program through the  Punjab Education Sector Project-III program (US$300 million), which closed  in June 2022. The Bank also supports interventions in the education sector in Punjab through the Human Capital Investment project (US$200 million, with US$30 million supporting strengthening and scale-up of early childhood education in 11 districts in South Punjab). The project supports the development of a 2-year early childhood education (ECE) curriculum and strengthening of ECE services in Punjab. Currently a minimum of 11,000 ECE classrooms meet new quality standards, which include the presence of a trained teacher and caregiver as well as a kit with instructional material. In addition, content for teaching and learning materials is being updated to ensure alignment with evolving curricula and standards.

The 5 year Sindh Early Learning Enhancement through Classroom Transformation (SELECT) project of $155 million, financed in part by the Global Partnership for Education grant ($55 million) supports the Sindh Education Sector Plan & Roadmap (SESPR) 2019–2024, focusing on 12 of 29 districts in Sindh, with the lowest performance on educational outcomes. Prioritized areas under SELECT include foundational literacy; teaching quality; classroom and provincial assessments improving access to elementary schools and enhancing the school learning environment, including in 250 flood-affected schools; proactive dropout mitigation (especially for girls) and transition from primary to secondary schooling through the development of a student attendance monitoring and redress system; and improved school and district-level governance which contribute to the achievement of its targets.

Balochistan

The Balochistan Human Capital Investment Project (BHCIP), which became effective in 2021, is implemented together with the health sector. The education component (US$17.75 million) focuses on the improved utilization of quality education services in selected refugee hosting districts. BHCIP funds the rehabilitation of schools and upgrading of primary schools to middle and high schools, merit-based hiring of additional teachers and strengthening of the education sector stewardship. To date, BHCIP has initiated the procurement of supplies for schools, including basic furniture, ECE classroom materials, science, and IT laboratory equipment. The project also aims to improve student assessment and teacher training across the province by supporting the Balochistan Assessment and Examination Commission and Provincial Institute of Teacher Education. Use of data for decision making and schools’ capacity to contribute to generating reliable data is another important element of the project that strengthens governance at school and district levels.

Khyber Pakhtunkhwa

In March 2021, the Government of Pakistan approved the US$200 million Khyber Pakhtunkhwa Human Capital Investment Project (KPHCIP) – a five-year project that aims to improve the availability, utilization, and quality of primary healthcare services and elementary education services in 4 districts of Khyber Pakhtunkhwa. The districts were selected because they have some of the highest refugee populations in the province. This financing includes a grant of USD $62.5 million from the IDA18 regional sub-window for refugees and host communities (IDA-18 RSW). The education component (US$115 million) of the project will focus on improving the availability, utilization, and quality of education services in selected districts for all children, especially refugees and girls. Approximately US$19M from the education component are being reallocated for flood rehabilitation and reconstruction in the original districts as well as 9 additional flood-affected refugee-hosting districts. 

OPERATING IN CONFLICT AREAS

In the aftermath of the militancy crisis in Pakistan, the Multi-Donor Trust Fund (MDTF) for Khyber Pakhtunkhwa (KP), Federally Administered Tribal Areas (FATA), and Balochistan was established in August 2010. The aim was to support the reconstruction, rehabilitation, reforms, and other interventions needed to build peace and create the conditions for sustainable development in the affected regions. After more than a decade of implementation, the MDTF officially closed on December 31, 2023.

In two rounds, the MDTF supported a range of projects to help build state-citizen trust in KP, FATA, and Balochistan. Round I of MDTF projects was implemented from August 2010 to March 2017 and focused on helping the provinces come out of the militancy crisis and take strides towards conflict prevention and peacebuilding. Subsequently, Round II was implemented from April 2017 to September 2023, achieving results towards reconciliation, peacebuilding and enhancing state- citizen trust by focusing on three pillars: (i) Growth and Jobs Creation; (ii) Improved Service Delivery; and (iii) Policy Reforms and Improved Governance.

The MDTF has aimed to build peace and create the conditions for sustainable development, but it has also helped address an array of immediate emergencies in Pakistan. For example, the MDTF has responded to unforeseen and immediate needs by supporting livelihood improvement measures in Balochistan in the aftermath of the 2022 floods. Furthermore, the fund was among the first to respond to the COVID-19 pandemic in Pakistan, providing much-needed resources.

The MDTF was closed on December 31, 2023, after the activities were completed and the targeted results were achieved. Of the funds of around USD 283 million, which included USD 11 million in investment income, USD 279 million (98 percent) was used for results, resulting in savings of around USD 3.6 million.

The MDTF achieved noteworthy results under its three results areas. The World Bank will continue to engage with the Governments of Khyber Pakhtunkhwa and Balochistan through several projects that build on the results achieved under the MDTF.

poor families, or 20 million people, are benefiting from BISP monthly cash grants all over Pakistan ($1 billion to date)

Pakistan: Commitments by Fiscal Year (in millions of dollars)*

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