Mentoring the youth

Zafar Masud
Sunday, Sep 04, 2022

Under my leadership, it remains a strategic priority to position the [Bank of Punjab] as having the risk appetite of a public-sector organization, coupled with service excellence of a private sector entity, without compromising on governing control regime with robust environment of compliance, risk and audit. Another strategic priority was to attract and retain the top-most talent from the market – subject matter specialists and experts – and this was tempered by instilling a culture of meritocracy across the organization, wherein high performance is incentivized and career progression is purely merit-based. We had marked 2021 as the year of ‘Our People’ and 2022 as the year of ‘Empathy’. What this entails on the organizational level is the assertion that the Bank puts the welfare of its people and their families as one of its foremost priorities.

Additionally, another area of focus that was previously overlooked is leveraging social media for better internal and external communication. Now, BOP is closer to being accepted as a household brand name, and its competitive products and services are becoming known to everyone. Significant focus was also exerted on Corporate Social Responsibility. I am a firm believer that business growth must go hand in hand with contribution to society, particularly, in terms of giving back to the less fortunate members of our community, enhancing financial inclusion, and improving lives through literacy and empowerment.

Insofar as the structural changes that I would like to see in the banking sector over time. There are three core aspects that I would like to address in this context.

Firstly, the share of private sector credit shall increase with reduced reliance on financing to the dominant borrower (ie, the Government of Pakistan). Compared to its peer economies, Pakistan’s financial sector remains underdeveloped, principally in financing the private sector. This can be demonstrated by considering credit or loans to the private sector as a percentage of GDP. While credit to the private sector in Pakistan has increased in absolute terms, it has declined as a percentage of GDP (17 per cent in 2020, down from 29 per cent in 2008).

The reasons for this are multifaceted; the biggest impediment being government borrowing. Credit from the banking sector to the government has risen by more than 400 percent in the last decade. This rapid broadening of financing of the government has resulted in 66.8 per cent of all credit extended by the banking industry being directed towards the government (as of December 2021). Another reason, on the demand side, remains Pakistan’s large informal sector.

Second one is: The constitution of the banking industry. Currently, it’s totally lopsided and concentration of assets and liabilities rests with a handful of large banks who literally drive the agenda of the entire sector. This warrants a paradigm shift in the present constitution of the banking sector whereby a board based funding could be diverted to more desired and unconventional sectors, like agriculture, infrastructure, etc. Third and the last focus item is that the Banking in Pakistan, in a very basic sense, is the game of access to cheaper deposits, whoever has that is the winner. Therefore, it’s critical that the institutions having larger deposit holdings which is merely driven by the size of their network, shall be able to divert these deposits to more productive, specialized areas. In this respect, an attempt was made by the previous governments in the form of programs, like e-Kissan in Punjab and Kamyab Pakistan in Islamabad, whereby these funds were made available to those sectors which were precluded from financing in the past.

A quick rundown of some of the lessons I have learned through my experience in the Banking and financial sector would include; a strong, uncompromising ethical framework and moral code, emphasis on the importance of long term interpersonal relationship building, prioritizing a people-first approach insofar as empathy and care for individuals is concerned, and an unflinching and clear focus on strategic goals, while keeping in view the tactical objectives.

Neglecting morals in business may net you the odd, short-term gains, but true business practitioners do not trade the long-term for the short. The presence of an ethical framework in business or otherwise is crucial and getting more important as humans are evolving and geographical boundaries are blurring. The walls and layers are tearing down. The world is shrinking and inhabitants are becoming closer. The recent pandemic globally and, on the local level, the ongoing catastrophe owing to unprecedented flooding, has reinforced this thought.

Moving on to my assessment regarding the future of the Pakistani Economy, in brief, my vision about our economy going forward is that we shall be self-reliant, and self-sufficient. Self-reliance – defined as the ability of a country to plan, finance, and implement solutions to solve its own development challenges – which are driven by two factors: commitment and capacity. Commitment captures, how well a country’s laws, policies, actions and informal governance mechanisms – such as, cultures and norms – support progress toward self-reliance. Capacity measures how far the country has come in its ability to manage its own development journey across the dimensions of political, social, and economic development, including the ability to work across these sectors.

The economy must be fully inclusive with benefits to all. Bottom-up or trickle-down approach, irrespective, at the end of the day, inclusivity is the key. Some of the main factors that act as barriers to financial inclusion in Pakistan include high rates of economic informality in the country. Another reason is the high prevalence of cash-based transactions, and the general apprehension observed among the public with regards to documentation and formalization. And finally, one of the foremost reasons of low rates of financial inclusion in the country is the low rates of women participation in the economy.

At the end of the day, all our actions shall be solely and squarely to the benefit of our people and people alone. Nothing more, nothing less.

This has been excerpted from the writer’s address to the 17th Youth

Parliament, organized by the Pakistan Institute of Legislative Development and Transparency (PILDAT) on August 28, 2022.

The writer is president and CEO of the Bank of Punjab.