Consumer Banking

SERVICE PROBLEMS OF CONSUMER
BANKING IN PAKISTAN
Submitted To:
Mr. Haroon Hussain
Submitted By:
Mubeen Asghar
BBA (Hons.)7th
Roll No. 06-156
Session: 2006-2010
Department of Management Sciences

University of Education
Okara Campus
Service Problems of Consumer Banking in Pakistan
SERVICE PROBLEMS OF CONSUMER BANKING IN

PAKISTAN
TABLE OF CONTENTS
Executive Summary…………………………………………………………1
1. Introduction………………………………………………………………………….2
1.1 Background………………………………………………………………………….3
1.2 Purpose………………………………………………………………………………3
1.3 Objective……………………………………………………………………………..3
1.3 Assumptions…………………………………………………………………………3
2. Literature Review…………………………………………...................................4
2.1 Banking Industry of Pakistan……………………………………………………...5
2.2 State Bank of Pakistan (Central Bank)…………………………….…………….6
2.3 Consumer Banking in Pakistan…………………………………………………...6
2.4 Products of Consumer Banks……………………………………………………..8
2.4.1 Auto Loans…………………………………………………………………8
2.4.2 Home Loans………………………………………………………………..8
2.4.3 Personal Loans…………………………………………………………....8
2.4.4 Debit-Credit Cards………………………………………………………...9
2.4.5 Deposit Accounts……………………………………………………….....9
2.4.6 Wealth Management………………………………………………………9
2.4.7 E-Banking…………………………………………………………………10
2.5 Credit Information Bureau………………………………………………………..10
2.5.1 Introduction……………………………………………………………….10
2.5.2 History of CIB……………………………………………………………..10
2.5.3 Role of CIB………………………………………………………………..11
2.6 Contribution of Consumer Banking in Economic Development……………...11
2.6.1 Overview…………………………………………………………………..11
2.6.2 Consumer Financing and Economic Growth………………………….12
2.6.3 Role of SBP……………………………………………………………….12
2.6.4 Implication for Economy…………………………………………………12
2.6.5 Conclusion………………………………………………………………..13
2.7 Brief Overview of Some Local Banks…………………………………………..13
Page II
2.7.1 NBP………………………………………………………………………..13
2.7.2 MCB…………………………………………………………………….....14
2.7.3 UBL………………………………………………………………………..14
2.7.4 SBL………………………………………………………………………..15
2.7.5 HMB……………………………………………………………………….15
2.7.6 FBL………………………………………………………………………...16
2.8 Comparison of Consumer Financing Products Some Banks………………...16
2.8.1 Auto Loans ……………………………………………………………….16
2.8.2 Home Loans………………………………………………………………17
2.8.3 Personal Loans ………………………………………………………….18
2.8.4 Credit Card Loans ……………………………………………………….18
3. Research Methodology………………………………………………………….20
3.1 Strategy for Data Collection………………………………………………….….21
3.2 Primary Data collection……………………………………………………….….21
3.2.1 Surveys…………………………………………………………………....21
3.3 Secondary Data collection……………………………………………………….21
3.4 Population and Sample…………………………………………………………..22
3.4.1 Population………………………………………………………………...22
3.4.2 Sample………………………………………………………………….…22
3.5 Statistical Tools and Software Used For Data Analysis……………………...22
4. Analysis and Findings……………………………………………………………23
4.1 Opportunity……………………………………………………………………...…24
4.2 Challenges…………………………………………………………………………25
4.3 Problems faced by borrowers……………………………………………………27
4.4 Problem faced by lenders………………………………………………………..28
4.5 Customer’s preference for consumer banking ………………………………..31
4.6 Future prospects of consumer banking in Pakistan…………………………..32
5. Conclusions & Recommendations…………………………………………….34
5.1 Conclusion…………………………………………………………………………35
5.2 Recommendations………………………………………………………………..38
References……………………………………………………………………………..39
Appendix………………………………………………………………………………..40
Page III
Executive Summary
The purpose of this research is to explore the opportunities and challenges of
consumer banking in Pakistan and to find out the problems faced by both the
borrowers and lenders. I have selected 6 local banks form which survey is
conducted. The consumer finance is mainly beneficial for those people who
don’t have capacity to purchase expensive households in a single go but they
can afford it because of consumer finance.
The major problems faced by customers in getting a consumer loan are lack
of awareness improper guidance, slow processing and bank statement. Banks
should take steps to promote consumer banking.
Page 1
Page 2
1.1 Background
In Pakistan all banks & DFIs work under the supervision of the State Bank of
Pakistan, the four major sectors in which SBP has divided banks operations
are Corporate, SME, Agriculture and Consumer. SBP provide regulations
according to which all banks should work and continuously keep a track that
banks are complying through the regulations or not.
1.2 Purpose
Purpose of this research is to find out the service problems faced by both
borrowers and lenders and way to solve these problems, to improve this
sector of business.
1.3 Objective
This report will give an overview of the problems in current system of

consumer banking from the point of view of both the lenders and borrowers
and explore the upcoming opportunities in the area of consumer banking.
Main objectives:
 Problems in current system of consumer banking
 Solution of problems faced by borrowers and lenders
 Exploration of opportunities in future
 Role of consumer banking in economic development
1.4 Assumptions
 Consumer banking industry has a lot of potential to grow
 Both borrowers and lenders are facing a lot of problems
 High interest, wrong policies, lack of education etc. are the factors for
decline of consumer banking industry
 Consumer banking is still a highly profitable banking sector although
facing a lot of problem
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2.1 Banking Industry of Pakistan
In Pakistan all banks & DFIs work under the supervision of the State Bank of
Pakistan, the four major sectors in which SBP has divided banks operations
are Corporate, SME, Agriculture and Consumer. SBP provide regulations
according to which all banks should work and continuously keep a track that
banks are complying through the regulations or not.
Pakistan is the 6th most populous country of the world 4th in Asia and 2 nd in
SAARC countries, with a population of more than 160 Million of which 100
Million is less than 25 years old and with a 30 Million strong middle class
enjoying many benefits from consumer banking.
Banking sector in Pakistan has undergone a significant transformation in the
recent years and has also acted as a catalyst in the revival of the economy.
Many privatization, acquisition and mergers took place during last 7 years
which started from privatization of Muslim Commercial Bank, Allied Bank
Limited, United Bank Limited and Habib Bank Limited was also privatized by
government. These years also witnessed acquisition Union Bank by standard
Chartered Bank, Prime Bank by ABN Amro etc. took place and recently
Metropolitan Bank has been merged with Habib Bank. All these privatization,
acquisition and mergers resulted in high foreign investment in Pakistan and
Improved performance of banking industry while it has also helped banks to
gain more market share in short time and to easily meet the high paid-up
capital requirement of SBP i.e. Rs. 6 Million till 2009 which was Rs. 0.5 to Rs.
1 Billion in 2000.
The commercial banking sector in Pakistan can be segregated into three
categories:
1) Five large commercial banks with total branches in excess of 700 each.
Four of these banks have been denationalized in recent years
2) Branches of foreign banks in Pakistan
3) Local private banks.
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The market has been dominated by five large commercial banks. Foreign
banks have been in operation for a long time as well, but their business is
concentrated with large multinational clients. Local private banks were
allowed to be formed in 1991 and currently there are about 30 such banks,
which tend to serve local small to medium-sized enterprises. Pakistan has a
highly developed financial sector consisting of 4 public 12 private 21
commercial banks, DFI, leasing companies, mutual funds, Islamic venture
capital fund companies. The commercial banks have assets of over one
trillion rupees of which about 80% is held by domestic banks.
2.2 State Bank of Pakistan
The State Bank of Pakistan (SBP) is the central bank of Pakistan. The
principal officer of the SBP is the Governor. Syed Saleem Raza appointed as
a new Governor of the State Bank of Pakistan on January, 02, 2009 to
replace Dr. Shamshad Akhtar.
While its constitution, as originally lay down in the State Bank of Pakistan
Order 1948, remained basically unchanged until January 1, 1974, when the
bank was nationalized, the scope of its functions was considerably enlarged.
The State Bank of Pakistan Act 1956, with subsequent amendments, forms
the basis of its operations today. The headquarters are located in the financial
capital of Pakistan, Karachi with its second headquarters in the capital,
Islamabad.
2.3 Consumer Banking in Pakistan
Consumer banking which is one of the fastest growing sectors of Pakistan

Banking Industry is also now major interest point for the banks. Initially the
consumer banking sector was only focused by the foreign banks but its
efficiency & profitability attracted others to come towards this business but still
the major share of consumer banking in Pakistan is in the hands of foreign
banks.
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In a generic sense, institutional arrangements that provide consumers with

financing support to enhance their consumption and as a result thereof,
improve their standards of living should fall within the broad definition of
consumer finance. For the past 50 years commercial banks in Pakistan had
completely ignored consumer financing as an activity.
Consumer banking is a huge industry with great profits massive potential for
improving economic conditions. But the banking sector has to care more for
its subscribers rather than solely about itself. It needs to offer better services
at better terms and needs to inform the consumer completely and fully about
the services.
According to an analysis, credit cards loans have increased from Rs33.538
billion during first of last calendar year to Rs42.822 billion during first half of
current calendar year. Likewise, personal loans have increased from
Rs120.517 billion in H1CY07 to Rs142.373 billion in H1 CY08. Growth in auto
loans has not been less impressive. It registered an increase of approximately
Rs8.0 billion from RS97.777 billion to Rs105.444 billion during the
corresponding period of growth of credit cards and personal loans. Housing
loans have also registered an increase of approximately Rs11.0 billion in H1
CY 08 from Rs43.205 billion in H1 CY07.
Exposure per borrower
Amount in 000 2006 2007 2008

Credit cards 23 26 32
Auto loans 423 430 411
Consumer 37 29 22
durables
Mortgage loans 1572 1982 2025
Other personal 82 89 100
loans
Total 94 105 121
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Category wise consumer finance Amount of Consumer Financing
2.4 Products of Consumer Banks
2.4.1 Home Loans

The loans taken for Buying, Building or Renovating of house/land are
classified as home loans. For home loans both variable rate & fixed rate
options are also available. The maximum duration offered by banks for home
loans is generally twenty years that’s why banks conveniently give loans to
permanent employees of any firm to ensure strong repayment ability.
2.4.2 Auto Loans

In Pakistan auto loans are purchase of brand new or used, imported or local
cars for private use. Auto financing and auto leasing both facilities are offered
by most of the banks. Salaried Persons/Self Employed Professionals /
Business Persons who meet the terms and conditions to qualify for the
finance are eligible for the loan. Some banks are also offering both variable
rate & fixed rate options for auto loans. The average market rate for auto
loans is 14 to16%.
2.4.3 Personal Loans

Personal Loans are generally unsecured type of loans but in certain cases
when the amount of personal loans increases the normal limit its remaining
portion must be secured. Personal loans include loans for the purpose of
education, marriage, purchase of consumer durables, furnishing, traveling,
etc. Generally the limit for personal loans is maximum Rs.500, 000/-
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2.4.4 Debit-Credit Cards

Credit Cards mean cards which allow a customer to make payments on credit.
Supplementary credit cards are considered part of the principal credit card.
Initially only foreign banks are offering credit cards in Pakistan but now many
local banks is also offering credit card facility. Credit Card is covered by three
networks VISA, Master Card & American Express.
Debit cards are issued to account holders of any bank in Pakistan almost all
the banks are offering debit card facility the amount used by the debit card
holder is directly debited from the account of the card holder. Debit cards are
accepted at all ORIX Network in Pakistan and it can also be used as ATM
cards which are covered by 1-Link & MNET network in Pakistan.
2.4.5 Deposit Accounts

All the commercial banks are offering different kinds of deposit accounts these
account ranges from customer to customer to fill the need of every type of
customer. Few of the accounts provide high interest while some pay low
interest & some don’t pay any interest. Some major categories of deposit
accounts are;
 Current Accounts
 Saving Accounts
 Foreign Currency Accounts
 Business Accounts
 Term Deposits Accounts
2.4.6 Wealth Management

Wealth management is a new kind of service introduced in consumer banking
sector now a days. It covers all aspects of securing future of bank’s customers
it includes insurance, tax advisory, financial consultancy, investments plans,
etc. Yet wealth management service are mainly covered by few foreign banks
only this is a new service are even bank’s customers don’t have any idea
about Wealth Management Service. Almost all the banks are offering
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insurance services to some of their customers but the concept of wealth

management is not behind it.
2.5.7 E-Banking
To facilitate its customers all banks local & foreign are offering high
technological e-banking services. These services let the banks customers to
perform many banking activities easily without any restriction of time & place.
Some of the major e-banking services provided by the banks are;
 Phone banking
 Internet banking
 Plastic Cards
 Online banking
 Mobile banking
 ATM
2.5 Credit Information Bureau
2.5.1 Introduction
The bureau is a repository of credit information of borrowers. The member

lending institutions provide credit data (personal and loan information) of their
borrowers to the bureau which consolidates, updates, and stores the same
and provides this information to its members Financial Institution in the form of
credit worthiness reports (CWR).
2.5.2 History of CIB
The Credit Information Bureau (CIB) is a public sector credit bureau of

Pakistan. It was established in 1992 by the State Bank of Pakistan (SBP)
under Section 25(A) of Banking Companies Ordinance-1962. The CIB is a
part of Banking Surveillance Department of the State Bank of Pakistan.
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2.5.3 Role of CIB
The CIB plays an important role in promoting financial discipline, better credit
risk management and making prudent lending decisions. It is globally
recognized that a well developed financial sector must have effective credit
risk detection and management system to allocate credit efficiently. The CIB
helps financial institutions in managing credit risk and assessing true credit
worthiness of existing as well as prospective borrowers.
The Credit Information Bureau also aid financial institutions to make well
informed credit decisions in timely manners minimizing the credit risk. All fund
and non-fund base credit facilities irrespective of any outstanding amount are
being reported to the CIB. Reporting to the CIB is mandatory for all member
financial institutions (FIs).
Two types of reports can be generated from e-CIB system:
1) Consumer Credit Information Report

2) Corporate Credit Information Reports
2.6 Contribution Consumer Banking in Economic

Development
2.6.1 Overview:
In Pakistan, consumer finance despite rapid growth during initial period of 2-3
years has started declining. During past few years the domestic consumer
finance emerged as one of the key factors to boost economic growth despite
its comparatively low share of 14 per cent in the total private sector credit
compared to its share in other countries like India and Indonesia where it
stands at 24 per cent and 30 per cent respectively.
Regional and global markets and economic players have become highly
competitive and banking sector is more concerned to safeguard its capital and
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enrich itself with higher returns on loans than government’s concern about
boosting economic growth.
2.6.2 Consumer Financing & Economic Growth:
Lending through credit cards, personal loans, auto loans, loans for durables
and housing finance emerged main streams of consumer finance. They
shaped domestic demand and lending strategy by the banking sector in quite
subtle ways. Consumer finance has also brought social change through
higher circular of money and relaxation of income constraints for borrowing
particularly among those middle class segments that were eager to become
part of growing economy and keen to benefit from economic growth. Without
consumer finance being in the driving seat of the banking sector, a large
number of people would not have benefited.
2.6.3 Role of SBP:
Consumer finance was backed by the SBP to give boost to economic growth
through demand-pull pressure. The banking sector went out of its way to
make it attractive for the consumers through easy lending and providing loans
for those consumer items that consumers envied the most. They were mostly
electrical appliances, autos and housing. Consequently, share of consumer
finance in over all loans increased from 9.4 per cent in 2004to 13.5 per cent,
Rs72.4 billion in 2006.
2.6.4 Implication for economy:
Consumption is the key to economic growth for one simple reason that it sets
pace for production of commodities and manufacturing of goods of different
sorts. The dilemma of managers of national economy over the years was to
execute a well defined strategy of economic growth along with taking
measures to bring structural changes in economy through prudent
administrative, fiscal and monetary policies. Developed economies register
Page 12
growth because of domestic consumption and exports. These twin factors

guarantee their economic survival in this highly competitive world. China and
India are the two best examples in this context. What options are available to
Pakistan for economic growth? Right now, exports are going slow and
consumption is fuelled by financially strong segments of society who totally
depend upon remittances sent by their relatives working abroad, profits
earned through speculative investment and as beneficiaries of expansionary
fiscal policy pursued by the government.
2.6.5 Conclusion:
The real beneficiaries of consumer finance are the people who did not have
capacity to purchase expensive household items in a single go but could
afford them because of consumer finance, the commercial banks that have
been earning large interest and huge returns on their investment in consumer
finance and the economy that got impetus for growth. The point of concern is
that consumer finance is helpful only for those who are to some extent affluent
to opt for it.
In case economy is to sustain growth through consumer finance as one of the
important factors of growth, then income inequalities should be bridged and
income level be increased to develop paying capacity of large number of
consumers. Inflation should be contained and a strong broad based middle
class be built. Unless these imperatives were met, it is doubtful if consumer
finance based on weak middle class supported by remittances can really play
the same role that it is played by strong and affluent middle class both in
developed economies and to some extent in emerging economies.
2.7 Brief Overview of Some Banks
2.7.1 National Bank of Pakistan
National Bank of Pakistan maintains its position as Pakistan's premier bank

determined to set higher standards of achievements. It is the major business
Page 13
partner for the Government of Pakistan with special emphasis on fostering

Pakistan's economic growth through aggressive and balanced lending
policies, technologically oriented products and services offered through its
large network of branches locally, internationally and representative offices.
According to annual report 2008
Profit after Tax: 20 Billion
Total Assets: 875 Billion
No. of Branches: 1243
2.7.2 Muslim Commercial Bank
MCB is one of the leading banks of Pakistan with a deposit base of about Rs.
280 billion. Incorporated in 1947, MCB soon earned the reputation of a solid
and conservative financial institution managed by expatriate executives. In
1974, MCB was nationalized along with all other private sector banks. This
led to deterioration in the quality of the Bank’s loan portfolio and service
quality. Eventually, MCB was privatized in 1991. During the last fifteen years,
the Bank has concentrated on growth through improving service quality,
investment in technology and people, utilizing its extensive branch network,
developing a large and stable deposit base and managing its non-performing
loans via improved risk management processes.
2.7.3 United Bank Limited
UBL has assets of over Rs. 300 billion and a solid track record of forty six
years - in addition to the convenience of over 1000 branches serving you
throughout the country and also at several overseas locations. It was
established in 1959. The Bank's long term rating is AA +, which denotes good
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credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.
2.7.4 Soneri Bank Limited

The bank now operates with 89 Branches spread all over Pakistan including
the Northern Areas of the country where no other private bank has ventured
so far. Expansion of branches is based on a policy of maintaining a balance
between the urban and rural areas with a view to offering services even in the
remote areas of Pakistan. Pleasant and sophisticated atmosphere has been
provided in the branches which are all fully air-conditioned and computerized.
Profit after Tax: 1020 Million
Total Assets: 77.73 Billion
No. of Branches: 89
2.7.5 Habib Metropolitan Bank Limited

Habib Metropolitan Bank was incorporated in Pakistan as a Public Listed
Company in 1992 under the name, Metropolitan Bank Limited. The Bank
commenced, duly licensed, full scheduled commercial-banking operations in
October 1992. On October 26, 2006 Habib Bank A G Zurich’s Pakistan
Operations merged into Metropolitan Bank Limited and the merged entity was
named Habib Metropolitan Bank Limited (HMB). Demonstrating a strong
commitment to Pakistan economy, HBZ is the principal shareholder of HMB.
HMB operates in all major cities of the country. The Bank ranks within Top 10
in Pakistan with a strong vision to be the most respected Financial Institution.
Profit after Tax: 2947 Million
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2.7.6 Faysal Bank Limited

Faysal Bank started operations in Pakistan in 1987, first as a branch set-up of
Faysal Islamic Bank of Bahrain and then in 1995 as a locally incorporated
Pakistani bank under the present name of Faysal Bank Limited. On January
1, 2002, Al Faysal Investment Bank Limited, another group entity in Pakistan,
merged into Faysal Bank Limited which resulted in a larger, stronger and
much more versatile institution. In fact it has the highest share capital
amongst private banks in Pakistan and is amongst the largest in terms of
equity. Faysal Bank Limited is a full service banking institution offering
consumer, corporate and investment banking facilities to its customers. The
Bank’s widespread and growing network of branches in the four provinces of
the country and Azad Kashmir, together with its corporate offices in major
cities, provides efficient services in an effective manner.
Profit after Tax: 2,474 Million
2.8 Comparison of Consumer Financing Products by Some

Banks
2.8.1 Auto Loans
Bank name Maximum Maximum Minimum Maximum

Tenure Limit Down interest
payment rate
Soneri Bank 5 years Rs. 2Million 15% 14%
Limited
National - - - -
Bank of
Pakistan
Muslim 7 years No limit 10% 15.75%
Commercial
Page 16
Bank
United Bank 7 years 5 Million 10% 15%
Limited
Habib 7 years 3 Million 15% 16.5%
Metropolitan
Bank
Faysal Bank 5 years 7 Million 20% 15.99%
Limited
Average 6 years 4.25 Million 14% 15.448%
2.8.2 Home Loans
Bank name Maximum Maximum Debt:Equity Maximum

Ratio
Tenure Limit interest
rate
Soneri Bank 10 years Rs. 5Million 70:30 15%
Limited
National 20years Rs. 35 85:15 14 % approx
Bank of Million KIBOR + 4
Pakistan %
Muslim 25 years Rs. 20 70:30 14%
Commercial Million
Bank
United Bank 20 years Rs. 50 75:25 14%
Limited Million
Habib - - - -
Metropolitan
Bank
Faysal Bank 20 years 20 Million 80:20 15%
Limited
Average 19 years 26 Million 76:24 14.4%
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2.8.3 Personal Loans
Bank name Maximum Minimum Maximum

Tenure Down interest rate
payment
Soneri Bank 5 years 500,000 17%
Limited
National Bank 5 years 490,000 14%
of Pakistan
Muslim 5 years 500,000 27%
Commercial
Bank
United Bank 5 years 500,000 25%
Limited
Habib 5years 500,000 22%
Metropolitan
Bank
Faysal Bank 5 years 500,000 22%
Limited
Average 5 years 498000% 21.66%
2.8.4 Credit Cards
Bank name Maximum Limit Maximum interest

rate
Soneri Bank - -
Limited
National Bank of - -
Pakistan
Muslim 500,000 45% pa
Commercial Bank
United Bank 500,000 45% pa
Page 18
Limited
Habib Metropolitan - -
Bank
Faysal Bank - -
Limited
Average 500,000 36% pa
Page 19
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3.1 Strategy for Data Collection
Two survey forms have been designed one for the bank’s staff and one for
bank’s customers to identify the problems and solutions faced by borrowers &
lenders in the area of Consumer Banking.
3.2 Primary Data collection
3.2.1 Surveys
Survey Form – I (for bank’s staff)

This form was filled by only those bank’s employees which are working in the
area of sales, credit, operations, branch management or any other area which
is relevant to consumer banking. All these bank’s staffs were directly or
indirectly dealing in consumer banking so they have a clear idea on consumer
banking sector.
Survey Form – II (for bank’s customer)
This form was filled by the customers of five selected banks in Pakistan.
There were only two conditions to be eligible to fill out the form that the bank’s
that person must have a bank account in any local or foreign bank and have
some idea of consumer banking.
3.3 Secondary Data collection
Secondary data has been collected from different magazines, websites, news
papers and journals. For secondary data collection the main focus was on
local materials while some information on consumer banking in different
countries has been collected to see the trends and new opportunities.
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3.4 Population & Sample
3.4.1 Population
This survey is conducted in different banks of Okara and Sargodha from

people of different ages including both males and females. Altogether one
hundred & fifty samples are selected from customer survey out of two
hundred forms and fifty samples in banks survey.
3.4.2 Sample
For Surveys
The banks have been selected; all the survey forms have been filled by staff
of those banks and customers
Muslim Commercial Bank (MCB)
Soneri Bank Limited (SBL)
United Bank Limited (UBL)
Faysal Bank Limited (FBL)
Habib Metropolitan Bank Limited (HMB)
National Bank of Pakistan (NBP)
3.5 Statistical tools and Software to be used for data analysis
For data representation tables and graphs have been used. Several other
factors are taken to analyze the survey. Major softwares that are being used
for these surveys analysis are MS Word, MS Excel and SPSS.
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4.1 Opportunities
The most preferred category for issuing consumer loans is salaried individuals
one of the most important reasons behind this is that they are more reliable
and they have regular source of income or incase of any problem them
employers can also be approached for any query. The two other categories
which are businessman & self-employed people are considered after
organizational employees, these two categories also have can also give a
great business to consumer banking industry but suitable conditions & polices
must be prepared to disburse more loans to them.
One of new concept introduced in the area of consumer banking is Wealth
Management Service. The service is classified as an advanced type of
financial planning that provides high net worth individuals and families with
private banking, estate planning, asset management, legal resources, and
investment management, with the goal of sustaining and growing long-term
wealth.
During our survey more than 4% respondents said that they don’t have any
idea of wealth management service. Although 40% of the respondents said
that their bank is providing WMS because insurance is also a part of WMS
and many banks are providing insurance service to their saving accounts
holders but there is no concept of WMS behind this.
Number Percentage
Yes 60 40%
No 13 8.6%
No Idea 73 48.6%
No Response 4 2.6%
50%
40%
No Response
30% No Idea
20% No
Yes
10%
0%
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To increase the consumer banking business through WMS banks should

create more awareness about WMS and its benefits should be highlighted so
that consumer banking industry could grow promptly.
The consumer banking industry still has a lot of potential to introduce new
products & services during my survey I asked the bank’s customers that
which new service would they like to be introduced most of the respondents
marked that they want ‘Money at door step’ service to be introduced.
Number Percentage
Internet Banking 11 7.3%
Money at door step 83 55.3%
Online Inter bank transfer 52 34.6%
Other 0 0.0%
No response 4 2.6%
No respnose
60.00%
50.00% Other
40.00%
Online Inter
30.00% bank transfer
20.00% Money at door
10.00% step
0.00% Internat Banking
After which the most preferred new service to be introduced is ‘Online

Interbank Transfer Facility’. The aim of consumer banking is to provide high
convenience to their customers. Services like Money at door step & Online
Interbank Transfer Facility should be introduced soon because they will
provide high comfort to banks customers.
The economic survey 2005-06 claims that the national economy is undergoing
structural shifts marked by rapid changes in consumer spending pattern. The
real private consumption expenditure had more than doubled from 8.2 to
16.8% suggesting the emergence of a small middle class with buying powers.
4.2 Challenges
Banks rely more on existing customers for issuing any type of consumer
loans, giving loan to a new customer is more risk for a bank because the bank
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don’t have their track records of incomes and expenditure while with the help
of CIB any bank can check any person credit records but those maintaining
account with the bank or involved in any type of dealing are focused more for
issuing consumer loans.
Although during last five years the tenure of different consumer loans have
been increased but the bank’s customers are not highly satisfied by the tenure
according to our survey 48.6% of respondents are not satisfied by the tenure
of consumer loans the survey result can be seen in the table 4.3 & figure 4.3;
Satisfaction by tenure of Consumer Loans Table 4.3
Number Percentage
Yes 46 30.6%
Up to some extent 73 48.6%
No Idea 30 20.0%
No Response 01 6.0%
50%
No Response
40%
No Idea
30%
20% Up to some
extent
10% Yes
0%
Satisfaction by tenure of Consumer Loans Figure 4.3
After analyzing the survey results conducted at different banks in Okara and
Sargodha it has been seen that most of the bankers i.e. 92% said that they
frequently update their customer records but still when any customer defaults
sometimes its get difficult for the banks to trace that person it may be due to
the false information provided by the customers or by leniency of banks staff
its becomes difficult to catch the defaulter.
Issuing consumer loans to the right person sometimes becomes difficult
because in the case of self-employed the problems are complicated further
because many potential consumers do not keep credible records of the
streams of earning from their vocations or business to permit financing banks
a reliable assessment of their future re-payment capacity.
Page 26
4.3 Problems faced by borrowers

The major problems faced by customers in getting a consumer loan are
improper guidance, slow processing and bank statement. In our survey 56%
of respondents said that they are facing problems in getting consumer loans.
Number Percentage
Irrelevant Information 20 13.3%
Improper guidance 46 30.6%
Slow Processing 44 29.30%
Bank Statement 35 23.3%
Others 5 3.3%
Problems in getting consumer loans
35% Others
30%
Bank statement
25%
20% Slow processing
15%
Improper guidance
10%
5%
Irrlevant
0% information
Whether a person is applying for auto loan, personal loan, home loan or a
credit card it must have a bank account and a good bank statement this
makes easy for a customer to get a consumer loan and also helps banks to
asses its customers better but most of the time people who apply for a
consumer loan even don’t have bank account or they are not actively using
that account which makes difficult for them to get a loan.
The most actively used consumer financing product is Credit Card and one of
the major problems faced by bank’s customer on credit cards is its high
interest rate, its very easy for anyone to get a credit card now days because it
don’t require any collateral, the only major thing that is required by the bank to
issue a credit card is a is a bank account with a good balance. Although its
easy to get a credit card but due to its high interest rate it becomes difficult for
borrowers to pay back the amount spend through credit card and delays in
their payment increases their debt burden day by day due to high penalties on
late payments and high interest. In many cases when the card holders delay
Page 27
the payment for a long period it even increases the amount i.e. interest &
miscellaneous charges more than the principal amount.
Very few borrowers know that the rate of interest being charged on consumer
finance by the financial institutions is too high as compared to prime interest.
Bank service charges have increased by more than 500% in certain cases
and have gone by 100 -150% in most cases in last seven years. No wonder
bank’s non-interest income also went up by 29% or Rs.43 Billion in 2006.
Despite of many changes in bank policies and strict regulations by SBP still
bank’s customers are facing hidden charges problem. In our survey more than
66% of respondents said that they are facing hidden charges problem. Banks
don’t clearly mention their miscellaneous charges at the time of issuing loans
or opening account due to which this problem took place.
Eventually, unsustainable burden of debt-servicing forced business to crash
and households ended up with negative equities. Maintaining the critical
balance between savings, investments and borrowers debt-servicing ability is
only possible if input prices remain stable affording business to sustain their
profitability and interest rates too remain stable affording business to sustain
their profitability and interest rates too remain stable to ensure that in the
medium term, debt servicing burden remains affordable for both consumers
and manufacturers.
4.4 Problems faced by lenders
According to our survey at different banks in Okara and Sargodha most of the
respondents i.e. 84% said middle class is the target market for issuing
consumer loans the reason behind this is that the middle class have a better
capacity of payback the loans as compare to lower class whose source of
income is mostly very low and not regular which increases that chance of
default and the upper class don’t have as such needs of getting a consumer
loans.
The most preferred consumer financing products by banks are personal loans
and credit cards due to high interest rate and easy terms to issue the highest
no of loans issued are in the category of personal loans and credit cards.
Page 28
Preferred category for issuing consumer loans Table 4.6
N=50 Percentage
Home Loans 15 30%
Auto Loans 16 32%
Credit Cards 26 52%
Personal Loans 37 74%
80%
70%
60%
Personal Loans
50%
Credit Cards
40%
Auto Loans
30%
Home Loans
20%
10%
0%
card and personal loans sometimes they became a major source of problem
for banks because they don’t have any collateral behind credit cards &
personal loans in case of defaults the chance to get back the loan amount are
less.
According to an analysis 1.5 million credit cards issued and the number of
borrowers reveals that an average a borrower against the credit card has
more than one credit card. During 2006 the quality of consumer portfolio
witnessed deterioration because non-performing loans of this sector
increased to Rs. 7 billion in 2007 from about Rs. 3 million in 2005. At an
average a person carries two to five credit cards and also prefers to rollover
the credit by making minimum payment. The result is persistent increase in
the liability and ultimate default.
The biggest category in term of loan amount is of auto and home loans but
banks are focusing more on its customer’s current repayment ability and less
on long term ability. Customer profile measured by banks according to our
survey can be seen in the table 4.8 & figure 4.6.
Method of measuring customer profile Table 4.8
N Percentage
Repayment ability 26 52%
Liquidity 14 28%
Solvency 2 4%
Willingness to pay 7 14%
No response 1 2%
Page 29
60%
50%
No response
40% Willingness to pay
30% Solvency
Liquidity
20%
Repayment ability
10%
0%
Method of measuring customer profile Figure 4.6
Due to which in case of defaults on auto and home loans 100% recovery
becomes difficult. Factors like repayment ability, Liquidity, willingness to pay
are also important but if banks focus more on the customer’s long-term ability
it can be assured that most of the loan amount could be recovered.
Auto loans have become very trouble-some for the private banks. The rate of
defaults has increased at phenomenal rates. The cars are auctioned at lower
prices which do not recover the entire amount invested by bank.
Most of the respondents in our survey of bank’s staff said that the major
reasons for defaults on consumer loans is improper assessment and
consumer willingness, due to improper assessments by bank’s staff the
default occurs it may be true that the customers don’t provide the correct
information which resulted in improper assessment.
Major reason for default on consumer loans Table 4.9
N
SBP regulation 02
Internal Policies 15
Market scenario 08
Consumer willingness 29
Improper Statement 34
Page 30
35 Improper
statement
30
Consumer
25 willingness
20 Market scenario
15
Internal Policies
10
5 SBP regulation
0
Major reason for default on consumer loans

If a customer’s income is good, he/she is capable of paying loan but if the
customer is not willing to pay the loans the default can not be stopped.
4.5 Customer’s preference for Consumer Banking

According to sample of our survey most of the customers who have accounts
in local banks rate local banks schedule of charges at moderate level. There
is no doubt that in Pakistan service charges of local banks are less than 50%
as compare to foreign banks that’s why for general banking services people
prefer local banks more.
N Percentage
Foreign Banks 25 15.5%
Local Banks 56 37.33%
Any 66 44%
No response 03 2%
50%
40%
No response
30% Any
Local banks
20%
Foreign banks
10%
0%
When in a survey we asked people that in which bank they operate their
account. Most of the respondents said local bank.
N Percentage
Very High 23 15.3%
High 52 34.6%
Average 66 44%
Low 8 5.3%
No response 01 0.6%
Page 31
50%
40% No response
30% Low
Average
20% High
very high
10%
0%
When the same respondents asked to rate their bank schedule of charges the
results was……
But the most preferred type of banks for consumer banking is foreign banks
some of the major reason behind this is that foreign banks provide better
customer service as compare to local banks and they have a large variety of
consumer banking products.
Although now days there is no major difference between interest rate on
consumer financing products offered by local and foreign banks but still the
major share of consumer financing is still captured by foreign banks in
Pakistan.
When asked by the bank’s customers that which bank they prefer for
consumer banking the result showed that 44% of respondents don’t bother
that the bank in local or foreign but 37% of the respondents prefer foreign
banks for consumer banking figure 4.10 table 4.12 of the customer survey
reflects the customers preference;
4.6 Future prospects of Consumer Banking in

Pakistan
Banks are focusing more on consumer finance and their strategy is fully
complemented by the companies marketing consumer durable. Now an
individual can acquire from a mobile phone to an expensive automobile on
monthly installments if he/she can convince the lender about regular income
and repayment ability.
Page 32
It is a two-way traffic and both the lender and borrower have realized their
rights and obligations. Financial institutions are in the business of lending and
cannot afford delinquent loans. Similarly people desirous of improving their
lifestyle wish to continue accumulating new assets. Therefore the best
practice to follow is ‘you keep me happy I will keep you happy’. (Kazmi, 2007)
Consumer financing has started slow down now. The growth was 29% or 72.4
Billion in the first half of 2006 to mare to the total consumer portfolio equal to
Rs.325 or 13.5% of the overall loans of the banking sector. The growth has
shrunk to 9% in first half of 2007. The reason for this is not the precautionary
measures taken by bank but higher rates due to which consumer are shying
away from consumer financing. The diversion of the Government borrowing
from central bank to the Government is also creating a crowding out impact
thus leaving a little room to the banks to remain aggressive in the area of
consumer financing.
Maintaining the critical balance between savings, investment and borrowers
debt-servicing ability is possible if input prices remain stable affording
business to sustain their profitability and interest rates too remain stable to
ensure that in the medium term, debt servicing burden remains affordable for
both consumers and manufacturers.
Page 33
Page 34
5.1 Conclusion
The consumer banking industry has many opportunities to grow, customer

wants convenience mode of banking for which new products & services
should be introduced on the other hand it is giving huge profits to bank while
the level to risk is less in consumer financing as compare to others. Wealth
Management Service which is a new service in Pakistan Consumer Banking
industry its awareness should be increased as in our survey it reveals that
most of the respondent even don’t have any idea of consumer financing.
Bank’s customers want new services to be introduced in which Inter bank
Transfer Facility & Money at door step the most are demanding services.
In recent years the regulation for tenure and amount of consumer financing
has been changed many times but still the bank’s customers are not totally
satisfied by the tenure of consumer financing.
Improper guidance, slow processing and bank statement are the major
problems faced by bank’s customers in getting consumer loans. The reason
for these problems is that people applying for consumer loans don’t have
proper information about the requirements by the banks and due to high
number of applications & lengthy procedure by banks the loan processing is
slow.
Very few borrowers know that the rate of interest being charges on
consumer finance by the financial institutions is too high as compared to
prime interest. Incase of credit cards the respondents in our survey marked
High Markup Rate as the major problem they are facing in Credit Cards.
Despite of many changes in bank policies and strict regulations by SBP still
bank’s customers are facing hidden charges problem. Due to unclear
policies and term & condition of banks, customers are not able to know about
different charges of banks and the problem of hidden charges occurs.
Although CIB provide complete and accurate information about the bank’s
customer credit records but still loans default occur in consumer financing the
problem is not with only due false customer records but also due to wrong
policies and improper assessment by bank which cause defaults on consumer
loans.
Page 35
The target market for issuing consumer loans for banks in the middle class
because they have the strong ability to pay off their loans, banks should make
adequate polices to provide loans to lower class on easy terms and low
markup rate. Upper class is generally not focused for consumer financing
because they have enough resources & purchasing power to buy any asset.
Due to high markup personal loans and credit cards are among the most
preferred category of consumer financing by the banks. While in terms of
loans amount the biggest category of consumer loans are auto & mortgage
loans and they are preferred by banks because they have collateral which
provide security in case of any default.
According to bank’s staff the major reason for defaults on consumer loans is
improper assessment and consumer willingness to pay the loan. Auto
loans have become very trouble-some for the private banks. The rate of
defaults has increased at phenomenal rates. The cars are auctioned at lower
prices which do not recover the entire amount invested by bank. House and
car financing are safe modes of financing from the banker’s point of view as
the every rising real-estate and car prices coupled with safety margin in the
shape of down payment allow the bankers to enjoy a sound night sleep.
Most of the bank’s customers prefer local banks for general banking activities
this is mainly due to large branch network, wide range of services and low
service charges provided by the local banks. But for consumer banking,
customers prefer foreign banks in Pakistan this is due to high range of
consumer banking services provided by them. Foreign banks are the
introducer of CB in Pakistan still retains the major share of consumer
financing in Pakistan.
During the last five years consumer banking had witnessed a high growth in
Pakistan but its growth rate is declining now which is due to the high markup
rate charged by banks and high increase in NPL with low recovery rate.
Maintaining the critical balance between savings, investment and borrowers
debt-servicing ability is possible if input prices remain stable affording
business to sustain their profitability and interest rate should remain stable.
Page 36
There is no denying to the fact that consumer credit within prudent and
sustainable limits is desirable for economic growth, smoothing consumption
and improving credit risk diversification. At the same time unsustainable
consumer growth in weak macroeconomic environment, ineffective prudential
and regulatory framework, weak risk management system and legal
infrastructure can create systemic vulnerabilities. The consumer finance is
money lending affairs to a needy perform for improvement of his well beings
and ultimately his living standard in the society. It is financing facilities that
generally and wholesomely support consumption and as a result improves the
overall living standards of house holds.
Credit card is a risky mode of finance as no collateral is available to cover
risk. Perhaps this is the reason that this segment of bank finance has been
allowed to operate o the terms of the bankers without any worthwhile
monitoring by SBP. The growth in our economy has led to increasing
consumption trends, resulting in the widening demand and supply gap.
However as the people of the country become more educated they have
realized the benefits and conveniences of using plastic money as a mode of
payment. At the moment less than 1% population of the country is using
plastic money in Pakistan; therefore one can put complete blame of inflation
and price hike on it. Inflation in basic food items which is 11% is not directly
linked to plastic money or consumer financing. Developed countries facing
rampant consumerism find plastic money most efficient and acceptable mode
of payment.
Page 37
5.2 Recommendations
As the number of complaints of misuse cards increased PIN-based

credit cards should be issued that would provided additional security.
Markup charged on consumer financing should be reduced to a
substantial level so the spread between bank loans and deposit could
be reduced and customer could easily pay off the loans
Better returns should be provided on deposit accounts
To facilitate the customer’s new products and services should be
introduced continuously
SBP should continuously update its regulations according to need of
people and economic situations of the country
Increase consumer awareness, give clear instructions and guidance
Make customer friendly policies but it should also cover the risk factor
Markup charge on loans & interest given on deposits should be
regularly monitored and guided by SBP
Page 38
References
Consumer Banking in Pakistan,

A Marketing Review Report By S. Imran Ahmed
Perspectives on consumer finance in Pakistan,
Financial Stability Review 2007-08
Review of Economic Situation Jul-March 2008-09
www.sbp.org.pk
Banking System Review 2006
www.sbp.org.pk
Prudential Regulations For Consumer Financing
www.sbp.org.pk
Muslim Commercial Bank detail
www.mcb.com.pk
Fasyal Bank Detail
www. Faysalbank.com
Habib Metro Politan bank detail
www.hmb.com.pk
Habib Bank Detail
www.habibbankltd.com
United Bank Detail
www.ubl.com.pk
Soneri Bank Detail
www.soneribank.com
Page 39
Appendix
Survey Form – I (For Bank’s Staff)
University of Education Okara Campus
SURVEY for research based project on ‘Service problems of consumer
banking in Pakistan’
Name: ________________________ Gender: □ Male □ Female
Designation: ___________________Qualification: □ Intermediate □ Bachelors
□ Masters □ Doctoral
Experience: □ 1-5 years □ 6-10 years □More than 10 years
Note: To be filled by bank’s staff only
-------------------------------------------------------------------------------------------------------
1) Which category of individuals do you prefer most for consumer financing?
□ Self Employed
□ Businessman
□ Organizational Employee/Salaried Person
2) What is your target market for issuing consumer loans?
□ Lowers Class
□ Middle Class
□ Upper Class
3) Which type of financing is emphasized more by your bank? (Tick one or
more)
□ Personal Loan
□ Credit Card
□ Auto Loan
□ Home Loan
4) Which type of customer do you prefer most for consumer financing?
□ Previous Customers
□ New Customers
Page 40
□ Existing Customers
5) Is your Credit Information Bureau reliable?
□ Yes
□ No
6) Do you frequently update your customer records?
□ Yes
□ No
7) How do you measure customer profile?
□ Repayment Ability
□ Liquidity
□ Solvency
□ Willingness to pay
8) Do you think that variation in interest rate offered by different banks effect
your performance?
□ Yes
□ Yes to some extent
□ No
9) What are the major reasons for defaults on consumer loans? (Tick one or
more)
□ SBP Prudential Regulation
□ Internal Policies
□ Market Scenario
□ Consumer Willingness
□ Improper Assessment
10) In case of increasing NPL, what is your reaction towards consumer
financing?
□ No effect
□ Increase Financing
□ Decrease Financing
□ Change Policies / Criteria
11) Any specific problem do you face in the area of Consumer Banking?
12) Any suggestion for improvement in the area of Consumer Banking?
Bank’s Staff Survey Results
Demographic Data:
Page 41
Gender: Males 85% Females 15%

Qualification: Intermediate/Diploma 9% Bachelors 45%
Masters 36%
Experience:
1-5 Years 40%, above 5 years 35%, above 10 years 25%
-------------------------------------------------------------------------------------------------------
1) Which category of individuals do you prefer most for consumer financing?
70%
60% Self
50% Employed
40% Businessman
30%
20% Slaraied
10% person
0%
2) What is your target market for issuing consumer loans?
100%
Lower class
80%
60% Upper calss
40%
20% Middle
class
0%
3) Which type of financing is emphasized more by your bank?
40 Personal
loan
30 Credit
cards
20
Home loan
10
Auto loan
0
4) Which type of customer do you prefer most for consumer financing?
Page 42
60%
50%
40% Previous
30% New
20% Existing
10%
0%
5) Is your Credit Information Bureau reliable?
100%
80%
60% No
40% Yes
20%
0%
6) Do you frequently update your customer records?
100%
80%
60% No
40% Yes
20%
0%
7) How do you measure customer profile?
No response
50%
40% Willingness to
pay
30%
Solvency
20%
Liquidity
10%
0% Repayment
ability
8) Do you think that variation in interest rate offered by different banks effect
your performance?
60%
50%
40%
Local Banks
30%
Foreign banks
20%
10%
0%
9) What are the major reasons for defaults on consumer loans?
Page 43
Improper
statement
30%
25% Consumer
willingness
20%
15% Market
scenario
10%
Internal
5%
policies
0%
SBP
regulation
10) In case of increasing NPL, what is your reaction towards consumer

financing?
No response
60%
Change policies
40%
Decrease
20% financing
Increase
0% financing
No effect
Survey Form – II (For Bank’s Customers)

University of education Okara Campus
SURVEY for research based project on ‘Service problems of Consumer
Banking in Pakistan
’Name: ___________________________Gender: □ Male □ Female
Profession: _____________________Qualification:□ Intermediate□ Bachelors
□ Masters □ Doctoral
-------------------------------------------------------------------------------------------------------
1) In which bank you operate your account?
□ Local
□ Foreign
2) How will you rate your bank schedule of charges?
□ Very High
□ High
□ Average
□ Low
3) Which type of bank do you prefer for consumer banking?
□ Local
□Foreign
Page 44
□ Any
4) Have you ever used any consumer financing product? (Tick one or more)
□ No
□ Yes (If yes then tick appropriately below)
□ Credit Card
□ Auto Loan
□ Home Loan
□ Personal Loan
5) Are you facing any difficulty in getting consumer loans? (Tick one or more)
□ No
□ Irrelevant Information
□ Improper Guidance
□ Slow Processing
□ Bank Statement
□ Other _____________
6) Are you satisfied by the tenure for consumer loans?
□ Yes
□ Yes up to some extent
□ No
7) What is the major problem in Credit Cards?
□ Low Limit
□ Repayment Schedule
□ High Interest Rate
□ Other
8) _______Which of the following e-banking services are provided by your
bank?
(Tick one or more)
□ Online Banking
□ Debit Card - ATM
□ Mobile Banking
□ Telephone Banking
□ Internet Banking
□ Online Bill Payment
Page 45
□ Credit Card
□ Other __________
9) Is your bank providing any wealth management services? (Tick one or
more)
□ No
□ No Idea
□ Insurance Services
□ Investment Services
□ Financial Advisory
□ Other ___________
10) Which of the following new service would you want to be introduced by
your bank?
□ Internet banking
□ Money at door step
□ Online Inter bank Transfer Facility
□ Other ___________
11) Are you facing any hidden charges problem?
□ Yes
□ No
12) Do you think SBP should review its policies from time to time?
□ Yes
□ No
13) Any specific problem do you face in the area of Consumer Banking?
14) Any suggestion for improvement in the area of Consumer Banking?
Bank’s Customer Survey Results

Demographic Data:
Gender: Males 78.6% Females 21.4%
Qualification: Intermediate/Diploma 9.30% Bachelors 52.66%
Masters 34.00% Doctoral 00.60%
-------------------------------------------------------------------------------------------------------
1) In which bank you operate your account?
Page 46
60%
50%
40%
Local Banks
30%
Foreign banks
20%
10%
0%
2) How will you rate your bank schedule of charges?
50%
40% No response
30% Low
Average
20% High
10% Very High
0%
3) Which type of bank do you prefer for consumer banking?
50%
40%
Local bank
30% Foreign bank
20% Any
No respnose
10%
0%
4) Have you ever used any consumer financing product?
100%
80%
Personal loans
60% Home loans
40% Auto loans
Credit cards
20%
0%
5) Are you facing any difficulty in getting consumer loans?
Page 47
50 Other
40 Bank
statement
30
Slow
processing
20
Improper
10 guidance
Irrlevant
0 Information
6) Are you satisfied by the tenure for consumer loans?
50%
yes
40%
yes to some
30% extent
20% No
10% No response
0%
7) What is the major problem in Credit Cards?
60% Low limit
50%
Repayment
40% schedule
High Interst
30%
20% Other
10%
No response
0%
8) Which of the following e-banking services are provided by your bank?

Online bill
140
120 Internet
banking
100
Telephone
80 banking
60 Mobile banking
40
Debit-credit
20 cards
0 Online banking
9) Is your bank providing any wealth management services?
Page 48
50%
40%
yes
30% No
20% No idea
No response
10%
0%
10) Which of the following new service would you want to be introduced by
your bank?
No respnose
60%
50% Other
40%
Online inter
30%
bank transfer
20% Money at
10% door step
0% Internet
banking
11) Are you facing any hidden charges problem?
60%
50%
40% Yes
30% No
20% No response
10%
0%
12) Do you think SBP should review its policies from time to time?
80%
No
60% respnose
No
40%
20% Yes
0%
Page 49

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SERVICE PROBLEMS OF CONSUMER

Department of Management Sciences

SERVICE PROBLEMS OF CONSUMER BANKING IN

This report will give an overview of the problems in current system of

2.1 Banking Industry of Pakistan

2.2 State Bank of Pakistan

2.3 Consumer Banking in Pakistan

Consumer banking which is one of the fastest growing sectors of Pakistan

In a generic sense, institutional arrangements that provide consumers with

Exposure per borrower

Amount in 000 2006 2007 2008

Category wise consumer finance Amount of Consumer Financing

2.4 Products of Consumer Banks

2.4.1 Home Loans

2.4.2 Auto Loans

2.4.3 Personal Loans

2.4.4 Debit-Credit Cards

2.4.5 Deposit Accounts

2.4.6 Wealth Management

insurance services to some of their customers but the concept of wealth

2.5 Credit Information Bureau

The bureau is a repository of credit information of borrowers. The member

2.5.2 History of CIB

The Credit Information Bureau (CIB) is a public sector credit bureau of

2.5.3 Role of CIB

Two types of reports can be generated from e-CIB system:

1) Consumer Credit Information Report

2.6 Contribution Consumer Banking in Economic

2.6.2 Consumer Financing & Economic Growth:

2.6.3 Role of SBP:

2.6.4 Implication for economy:

growth because of domestic consumption and exports. These twin factors

2.7 Brief Overview of Some Banks

2.7.1 National Bank of Pakistan

National Bank of Pakistan maintains its position as Pakistan's premier bank

partner for the Government of Pakistan with special emphasis on fostering

2.7.2 Muslim Commercial Bank

2.7.3 United Bank Limited

2.7.4 Soneri Bank Limited

2.7.5 Habib Metropolitan Bank Limited

2.7.6 Faysal Bank Limited

2.8 Comparison of Consumer Financing Products by Some

Bank name Maximum Maximum Minimum Maximum

2.8.2 Home Loans

Bank name Maximum Maximum Debt:Equity Maximum

2.8.3 Personal Loans

Bank name Maximum Minimum Maximum

2.8.4 Credit Cards

Bank name Maximum Limit Maximum interest

3.1 Strategy for Data Collection

3.2 Primary Data collection

Survey Form – I (for bank’s staff)

Survey Form – II (for bank’s customer)

3.3 Secondary Data collection

3.4 Population & Sample

This survey is conducted in different banks of Okara and Sargodha from

3.5 Statistical tools and Software to be used for data analysis

To increase the consumer banking business through WMS banks should

After which the most preferred new service to be introduced is ‘Online

Satisfaction by tenure of Consumer Loans Figure 4.3

4.3 Problems faced by borrowers

4.4 Problems faced by lenders

Preferred category for issuing consumer loans Table 4.6

Method of measuring customer profile Figure 4.6