Retail deposit mobilization: SBP urges banks to reorient their business models

Retail deposit mobilization: SBP urges banks to reorient their business models.

Key points

• While deposits stood at Rs43 trillion at end-June 2026, highlighting the resilience of the banking industry, the Governor observed that banks' total assets had reached Rs69 trillion.
• The 11th edition of Pakistan Banking Awards ceremony was organised by NIBAF Pakistan in collaboration with Dawn Media Group and A.
• Retail payments hit Rs612trn mark in FY25: SBP.
• Meezan Bank Limited received the award for the Best Bank.
• While Pakistan's currency-to-deposit ratio remains elevated, despite substantial expansion, banking-sector assets and deposits remain relatively low as a share of GDP compared with other emerging markets.

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KARACHI: Governor State Bank of Pakistan (SBP) Jameel Ahmed has pressed banks to reorient their business models towards stronger retail deposit mobilisation and greater private-sector financing, emphasising that the banking sector has a critical role to play in supporting Pakistan's next phase of sustainable economic expansion.

Addressing the 11th Pakistan Banking Awards 2026 in Karachi, the Governor remarked Pakistan's economy had demonstrated resilience despite a challenging FY26 marked by domestic and external shocks, including severe floods, geopolitical tensions and an uncertain global trade environment.

He observed that inflation averaged close to the medium-term target range, inflation expectations remained broadly anchored, and the current account deficit stayed close to the lower bound of the projected range.

Foreign exchange reserves additionally continued their upward trajectory, comfortably exceeding the end-June target of USD 18 billion, with the quality of reserve accumulation improving as the rise was driven mainly by SBP's foreign exchange purchases rather than debt-driven accumulation.

Meanwhile, the Governor SBP emphasised that while policymakers had achieved the tough task of stabilising the economy, stabilisation alone was not sufficient to put Pakistan on a path of high and sustainable expansion. He remarked the banking sector had a particularly notable role to play in this next phase.

While deposits stood at Rs43 trillion at end-June 2026, highlighting the resilience of the banking industry, the Governor observed that banks' total assets had reached Rs69 trillion. Profitability remained solid and banks' Capital Adequacy Ratio continued to remain comfortably above both international benchmarks and domestic regulatory requirements.

Meanwhile, he pointed to significant opportunities for strengthening financial intermediation.

While Pakistan's currency-to-deposit ratio remains elevated, despite substantial expansion, banking-sector assets and deposits remain relatively low as a share of GDP compared with other emerging markets. Jameel Ahmed remarked there was considerable room to further reduce reliance on cash and strengthen the deposit base.

He encouraged banks to compete more actively for retail deposits, including offering attractive returns alongside quality services. A stronger culture of retail deposit mobilisation, he remarked, would broaden financial inclusion while providing banks with a more diversified and stable funding base.

Governor SBP additionally called on greater private-sector credit, noting that credit penetration in Pakistan remains well below that of emerging-market peers and that the ratio of bank credit to the private sector relative to GDP has declined significantly over the past three decades.

As a number of emerging economies with higher administration domestic debt have significantly higher private-sector credit-to-GDP ratios, he remarked the government's budgetary financing needs were not the only explanation for this trend.

He therefore encouraged banks to reorient their business models towards mobilising higher deposits and providing greater financing to the private sector.

For context, the 11th edition of Pakistan Banking Awards ceremony was organised by NIBAF Pakistan in collaboration with Dawn Media Group and A. F. Ferguson & Co. Governor SBP commended the organisers for holding the 11th edition of these awards which is a testament to the enduring partnership for recognising and celebrating the institutions that are helping shape the future of banking in our country.

Meezan Bank Limited received the award for the Best Bank. Along with the top honour, awards were presented throughout a number of key categories, including Best Bank for Women Inclusion to Bank of Punjab; Best Microfinance Bank to ASA Microfinance Bank Limited; Best Bank for Small and Medium Enterprises to Bank of Punjab; Best Bank for Agriculture Inclusion to Bank of Punjab; Best Bank for Digital Excellence to Bank Alfalah Limited; Best Bank for Customer Engagement to Meezan Bank Limited; Best Mid-Sized Bank to Askari Bank Limited & Faysal Bank Limited; Best Bank for ESG to HBL; and Best Contribution by Non-Bank Entity to Pakistan Microfinance Investment Firm Limited.

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Pakistan banks' credit to private sector in ratio of GDP declines over past three decades.

For now, retail deposit mobilization: SBP urges banks to reorient their business models remains the part of the story worth watching, and further updates are likely as more details are confirmed.