You Can Feel the recession !!!

Well ! if you can't then this means you have no feelings !

After a lot of Buzz on the whole globe we can see some significant effects of recession in Pakistani Economy especially on Financial Institutions and Banking Sector. FIs and Banks are now on a proactive stance and management is concentrating on cutting down the expenses and keeping the current position if not aiming for growth.

In reality its a hard time for both management and employees. SBP is pushing hard banks to maintains the Capital Adequacy Ration (CAR) in order to safeguard the interest of depositors, because these are the situations which could trigger a sheepwalk among the depositors even upon a rumor in the market. And such rumors are not only dangerous for individual institution but also for the whole industry. Therefore, by maintaining Capital Adequacy Ration SBP make sure that bank management has enough stake in business and they will never gonna lose their share !

Alongwith that SBP is also focusing on the portfolio health of Banks and FIs and trying to reduce the NPLs. Although, in current recession such NPLs are unavoidable and the can be said a normal thing. Or you can say that there woul be a natural percentage of NPLs in the market.

I read somewhere this quote that "if you don't have any bad loans this means that you are not lending !" So one should try and prepare to minimize these NPLs by adopting latest Risk Management techniques.

Businesses are in pressure, slow activity, high prices, political and economics conditions are adding to this recession. Government is not very much interested in tackling this recession or becoming proactive but they are concentrating more on getting aid and being paid to fight the war. But no matter how much you will get to fight the war , its always bad for economy in the end.