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World Bank and ADB urge Pakistan on financial reforms

ISLAMABAD — The World Bank and the Asian Development Bank (ADB) have asked the government to hire international legal and regulatory experts to reform its financial and banking systems.

Informed sources said that both the international donors have expressed their concern over reports of scandals in the Karachi Stock Exchange and inside trading by bankers that marred the image of Pakistan's financial and banking institutions at home and abroad.

They have asked the government to develop a "national strategy" for inclusive financial services that should incorporate all types of institutions including commercial banks, micro-finance banks, rural support programmes and other non-government organisations.

Both the donors told Islamabad that Pakistanis working in the banking and financial sector should work like international sector specialists who must have an extensive working knowledge of banking, micro-finance, international best practices and new technology being used in the financial sector.

Sources said the World Bank and ADB believe that Pakistan needed the services of international legal experts who should provide advisory support to the State Bank of Pakistan and the Ministry of Finance in conjunction with the relevant agencies, stakeholders consultants and forums to ensure adequate inputs and participation of stakeholders groups.

They were of the view that Pakistan required international legal support for providing technical assistance for applications for lower cost funds, transfers and remittances in Pakistan markets, conducting of feasibility study for national mobile money transfer, VSAT applications for other technological changes aimed at improving outreach of sustainable financial services including to the poor and rural areas.

However, donors said that those international financial and legal experts whose services were to be acquired, should have comprehensive information and experience about regulations, pertaining to banking and micro-finance in Pakistan. In addition they should also have good understanding about Pakistan's financial and banking sector.

Similarly, source said Pakistan was told to develop expertise for domestic Islamic finance and that the experts in the field must have good working knowledge of Islamic finance and experience in an Islamic financial institution. In addition, the specialists should demonstrate good understanding of the Islamic financial sector in Pakistan and its current regulatory framework.

Sources said that the central bank was expected to conduct professional survey for the development of national instrument on Islamic finance. There should be certain survey which should cover the Islamic financial markets in Pakistan to provide important baseline data for monitoring the sector characteristics and demand for growth and development.