Pakistan Banks Association (PBA) Chairman Zafar Masud has outlined proposals for addressing structural constraints affecting credit, competition and financial-sector growth in Pakistan, with particular attention to digital infrastructure, financial data and the relationship between banks and capital markets. In a concluding article published by Business Recorder, Masud discussed the role of technology in expanding access to financial services and argued that better use of financial data could help lenders assess borrowers beyond traditional banking channels. The article, titled “Cartel Charge, Fiscal Fact—II,” follows an earlier piece in which Masud responded to criticism of Pakistan’s bank-centric financial system and discussed issues including credit availability, banking competition, government borrowing and the depth of capital markets. In the second part, he set out three additional proposals covering tax rates, documentation-linked credit incentives and limits on sovereign borrowing from banks.
Masud highlighted digital infrastructure as an area where Pakistan’s financial system has already undergone significant changes. He pointed to Raast as State Bank of Pakistan infrastructure designed to support electronic payments and noted that its architecture is open to electronic money institutions, digital banks and fintech lenders. He also discussed the potential of financial data exchange to allow non-bank lenders to assess borrowers using information comparable to what banks can access. According to Masud, better access to reliable financial information could address one of the constraints facing lending in Pakistan, particularly where businesses remain outside formal documentation systems. He further said banks are working with the regulator on digital solutions in lending and on stablecoin-based settlement and remittance solutions. These observations were presented as part of his argument that digital infrastructure and data can broaden the financial ecosystem beyond traditional bank-based services.
The PBA chairman also connected the availability of credit with Pakistan’s broader documentation and taxation challenges. He argued that lenders require information such as audited accounts, tax returns and traceable cash flows to assess risk and price financing. As a proposed solution, Masud suggested a documentation-linked credit incentive under which businesses that improve their documentation and filing could become eligible for cheaper credit. He proposed that such a mechanism could be supported through a first-loss guarantee funded from additional revenue generated through greater documentation. His second proposal focused on a Financial Data Exchange, which he presented as a mechanism for making financial information more accessible to lenders. These are proposals contained in Masud’s opinion article rather than announced government or State Bank policy.
Masud’s third proposal called for a statutory ceiling on the government’s borrowing from banks as a share of deposits, arguing that this would prevent the sovereign’s claim on bank balance sheets from becoming dominant. He also supported measures including greater retail access to government debt, non-bank primary dealers, wider fund distribution and deeper foreign-exchange participation. The discussion comes amid an ongoing debate over the structure of Pakistan’s financial system, including the balance between bank financing and capital-market funding. In his earlier article, Masud argued that the high level of government borrowing from banks affects the amount of credit available to the private sector, while also disputing the characterization of Pakistan’s banking sector as a cartel.
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