State Bank does not want competition

KARACHI - No competition exists in the local banking sector while the regulator, the SBP, also does not want to create this atmosphere in the country, says Dr Agha Ghazanfar, advisor to the Competition Commission of Pakistan (CCP).
He said this while talking to the media on Friday on his analysis report on Competition in Banking Sector of Pakistan.
He highlighted that the prevalence of higher banking spread (the difference between rate of lending and the rate of return to depositors) was prove of no competition among banks functioning in Pakistan.
The consolidated banking system is profitable, stable and secure. It earns above-normal returns that are assured through maintenance of high banking spreads that the regulators do not want to bring down. As a consequence, there is a failure of competition, Ghazanfar said in his presentation. He maintained that small depositors were not the targeted-market of local banks rather corporate and big individuals. This situation was getting strengthened with the passage of time, which was not in favour of banks in the long run. It is commonly said that the only way to overcome the problems of democracy in Pakistan is to have more democracy. Similarly, the only way to avoid ill-effects of competition - which bank regulators are often wary of - is to have more competition, he said in his presentation.
On the occasion, Chairman-CCP Khalid A. Mirza said that the Commission has found indications of cartelization among sugar millers, but the detailed report which the Commission was determined to submit in the next two weeks to the Supreme Court, would reveal whether millers were culprits or not.