DAWN
Editorial
THAT banks in Pakistan “prioritise profit over purpose” and promote financial products with limited knowledge of their impact on individuals and society is not surprising. Businesses in this country — banks and other financial services included — are structured that way. So it is understandable that they are focused exclusively on their bottom lines for the benefit of their shareholders rather than broader socioeconomic goals, or customer empowerment. Recent research has pointed out that public banks in the country are better aligned with their customers’ socioeconomic aspirations because of the state’s ownership as opposed to the profit-driven business approach of private lenders. A new report by Fair Finance Asia reinforces the view that the lenders lag far behind in aligning their lending policies with the collective socioeconomic and environment objectives of society.
In its latest report, FFA has called upon banks to “do more to empower people and protect the planet”, besides ensuring transparent disclosure about their sustainability strategies and financing practices. The report ranks banks across Asia in four key areas: financial inclusion, consumer protection, financial literacy and education, and engagement and accountability mechanisms. Barring a few, Pakistani banks have performed poorly in these areas. Expecting for-profit banks to become transparent and commit themselves to social, environmental, and human rights standards by aligning their lending and other practices with the larger goals of sustainable socioeconomic development on their own and without a strong push from their regulator, the State Bank, is simplistic. Repurposing the role of finance in Pakistan, or for that matter elsewhere, to drive an environment-friendly, resilient and sustainable economy is not an easy task. It will also be unfair to blame only banks for their lack of commitment to make headway in this direction in the absence of an ecosystem of sustainable fiscal and economic policies for this transition.
Published in Dawn, December 7th, 2024
Editorial
December 7, 2024
THAT banks in Pakistan “prioritise profit over purpose” and promote financial products with limited knowledge of their impact on individuals and society is not surprising. Businesses in this country — banks and other financial services included — are structured that way. So it is understandable that they are focused exclusively on their bottom lines for the benefit of their shareholders rather than broader socioeconomic goals, or customer empowerment. Recent research has pointed out that public banks in the country are better aligned with their customers’ socioeconomic aspirations because of the state’s ownership as opposed to the profit-driven business approach of private lenders. A new report by Fair Finance Asia reinforces the view that the lenders lag far behind in aligning their lending policies with the collective socioeconomic and environment objectives of society.
In its latest report, FFA has called upon banks to “do more to empower people and protect the planet”, besides ensuring transparent disclosure about their sustainability strategies and financing practices. The report ranks banks across Asia in four key areas: financial inclusion, consumer protection, financial literacy and education, and engagement and accountability mechanisms. Barring a few, Pakistani banks have performed poorly in these areas. Expecting for-profit banks to become transparent and commit themselves to social, environmental, and human rights standards by aligning their lending and other practices with the larger goals of sustainable socioeconomic development on their own and without a strong push from their regulator, the State Bank, is simplistic. Repurposing the role of finance in Pakistan, or for that matter elsewhere, to drive an environment-friendly, resilient and sustainable economy is not an easy task. It will also be unfair to blame only banks for their lack of commitment to make headway in this direction in the absence of an ecosystem of sustainable fiscal and economic policies for this transition.
Published in Dawn, December 7th, 2024
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