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By repute, Pakistan’s banking can survive Covid-19 crisis with modification

By repute, Pakistan’s banking can survive Covid-19 crisis with modification

Interview with Mr Hamad Rasool Bhullar — an analyst

PAGE: Tell me something about yourself, please:

Hamad Rasool Bhullar: I am a freelance consultant/trainer and financial advisor with special reference to ethical and Islamic financial system, for almost 20 years, both in public and private sectors in addition to being a passionate trainer on management and motivation to change the lives of the youth.

I have a strong belief that we can shape our Pakistani community into a very efficient and productive community just through the right mix of training and motivation, while preserving the natural ethics and morality in our society.

I did my graduation from Hailey College of Commerce in 1990, after that I completed six post-graduations in Finance, Accounting, Economics, IT and Corporate Law. After graduation I worked for an accountancy firm for almost 12 years, before joining a public sector organization. Have also over 27 years of experience in training the banking courses (both conventional and Islamic finance) in addition to being on the Board of an Investment Bank for almost 4 years (2005-2008).

PAGE: How would you comment on the performance of the banking sector during the prevalent pandemic?

Hamad Rasool Bhullar: So far it has been a very difficult to operate by the entire banking sector, almost 10 percent of the commercial banking branches got closed, though temporarily due to COVID-19 infections, and a large number of banking staff got the COVID-19 positive only due to the careless effects of the general public behavior. Additionally the commercial banks have reduced the banking counters by almost 20 percent as preventive tool. This is going to affect the performance of not only our banking sector but globally as well. However a major part of the other sectors is also affected shrinking many global economies. Average operating cost of the banks has also increased firstly due to the additional arrangements at social distancing and dis-infecting the entry points and secondly due to the average fall in the transactions in other sectors.

PAGE: What is your take on the robustness of banks in Pakistan in meeting coronavirus havoc?

Hamad Rasool Bhullar: Pakistan’s banking sector has always been greatly on strong footings, as the world knows from the 2007-08 Financial Crisis, Pakistan was among the least affected countries with minimum disasters. I have great hope this time as well, most of the banks have taken it as an opportunity to shift a major part of their transactions on the internet connectivity, but unfortunately a large number of our community is illiterate who cannot use it, neither the ATMs as they are not able to protect their signatures or passwords, so banks have to deal with them on their counters/desks. Literacy is a “BIG limitation” our communities and the leadership have to apprehend for improvement. Mr. Jack Ma (founder of “Ali Baba” from China) has said in his recent statement that “it is a great success if we save ourselves, we must delay our business plans to the next year, we can still achieve, if we survived this COVID-19” (although his own business has expanded during this pandemic).


PAGE: What is the state of the Digital Banking in our country?

Hamad Rasool Bhullar: Banking has been considered as one of the essential services, and is working parallel with the health and security sectors. Further on, in banking sector some extra effort is needed due to the cultural and social behavior of our society. There are three avenues of the digital banking:

  1. First is Mobile Apps based banking which is flourishing and has still has to be promoted by the banks in this situation.
  2. Second comes the ATM based, in the current scenario it is also getting popular and has to be expanded with a reliability and confidence winning objective by the banks.
  3. Thirdly and lastly comes the other mediums of online banking.

We need to focus on the customers trust and confidence tools, as a lot of scams are also being reported mostly due to the innocence of customers, who need to be guided.

PAGE: How would you comment the financial activities such as Islamic Banking & Finance, Auto Finance, Housing & Mortgage, Personal loan and Interest rates at this juncture?

Hamad Rasool Bhullar: Your question has multiple dimensions and aspects. As the Government/State Bank of Pakistan have reduced the interest rates in Pakistan during this pandemic, there is still some capacity for further lowering it. In order to ease out the business environment at least two percent more is required and due that will bring the KIBOR to get eased and also enabling the Islamic Banks to become more competitive.

We cannot be optimistic in the short-run as the damage has been done hugely by this COVID–19 thing not only in Pakistan but around the globe. We are expecting a great number of bankruptcies mostly on mainstream businesses. But we can make a new start with a modified vision. Now coming to Islamic Banking and Finance, Islamic Banks and other IFIs have to deal with the reputation crisis as well to create awareness on war footing. Unfortunately as we were carrying the customers confidence in 2005-06 or later we could not maintain the pace and spirit. I have been a strong advocate in making the bankers as business partners whereby they learn the “Norms of Business” of their clients. Islamic Bankers cannot sit back and deal with documents alone, they need to connect and visit the business sites for it even if we make the maximum uniform business process models and products. All the segments of Islamic Banking and Finance (Auto Finance, Housing & Mortgage) will start showing improvements, and also will win the confidence from customers if we start dealing it as business and not banking alone.

Government of Pakistan has announced some incentives for the construction industry, which can bring fruits if it is motivating small investors in housing and mortgages). Through this platform I have to make this request to the Finance Ministry before the announcement of budget 2020-21.

At the end, if we talk of the “Personal Loans”, we in Pakistan have great potential but minimum vision on the bankability of the general public. We need to adopt an “Akhuwat” like model to work on this using the Branch network of our banks. In “Islamic Finance” we cannot earn from “Loans” and the other products of “Islamic Microfinance” have also been costly. However in Conventional Banks this model is working on a very limited scope which cannot be expanded unless an Islamic Model of financing is adopted.

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