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KARACHI, Aug 18 (APP): The Governor State Bank of Pakistan (SBP), Jameel Ahmad, Monday, underscored the importance of well-developed, deep and diversified capital markets to complement the banking sector and support long-term, sustainable economic growth.
He, while speaking at the conference titled ‘Unlocking the Capital Markets Potential for Banks’, emphasized on coordinated efforts by all relevant stakeholders for promoting financial literacy, expanding participation, and building a transparent, innovation-friendly market ecosystem.
The Federal Minister for Finance and Revenue, Muhammad Aurangzeb, Chairperson PSX Dr. Shamshad Akhtar, Chairman SECP Akif Saeed, CEO OSX Farrukh Sabzwari, Presidents, CEOs of banks and other stakeholders attended the conference, said in a statement issued here.
The governor pointed out the persistent structural challenge of low domestic savings despite improved macroeconomic conditions with inflation falling and growth gradually recovering. “With a savings rate of just 7.4% of GDP, compared to 27% in South Asia, the country remains overly reliant on external financing, contributing to recurring external account pressures and boom-bust cycles,” he stated.
Emphasizing the importance of robust capital markets in channeling domestic savings into productive sectors, the Governor noted that well-developed, deep and diversified capital markets- complemented by a resilient banking system- are needed to support sustainable economic development of the economy.
The Governor outlined recent SBP reforms aimed at broadening participation in the country’s bond market, including the inclusion of non-bank institutions as Special Purpose Primary Dealers and expansion of Investor Portfolio Securities (IPS) accounts to microfinance banks, the Central Depository Company (CDC) and, the National Clearing Company of Pakistan Limited (NCCPL). These reforms open new investment avenues to millions of digital banking users and lay the foundation for broader market development, he noted.
Despite progress in the government bond market, a limited development witnessed in corporate debt and equity markets, Jameel Ahmed observed and added, “Outstanding corporate bonds account for less than one percent of GDP, with limited secondary market activity and low participation from non-financial sectors. Similarly, equity market penetration remains modest, with investor accounts and market capitalization lagging behind peer economies.”
The Governor concluded by calling for coordinated efforts among regulators, financial organizations, government institutions and investors to promote financial literacy, expand participation, and build a transparent, innovation-friendly market ecosystem.