Gomal University, Dera Ismail Khan N.W.F.P. Pakistan

Abstract

The present study aims at examining the privatization of banking sector in Pakistan, its impact on efficiency, economy, employment and new products and services as well as on legal environment. For this purpose economic model was used to judge efficiency of banking sector for pre-and- post period of privatization. The model shows that banking sector in Pakistan after privatization of few banks improved its efficiency. Liquidity ratios of the banks have improved. Numbers and values of deposits have increased. Profitability of the banks increased. Value of non-performing loans is controlled. However, spread rate is still higher as compared to pre-privatization period. New products and services have been created to facilitate the customers. Impact on economy, in the sense of mobilization of savings, increase in loan advances and credit, as well as investment have shown an upward trend. Quality of assets of all banks has improved. The study shows that the numbers of employees have decreased in banking sector but this decrease is not alarming. The salary and remuneration to management / employees show increase; meaning better return to services of employees. For a new vision of the banking sector and to prevent financial mishaps in future, the State Bank of Pakistan and Government of Pakistan are required to develop a new regulatory system for privatized banks.