Capital market development key to sustainable economic growth: SBP governor


SBP governor

KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad has said that a well-developed, deep and diversified capital market is necessary to complement the banking sector and support long-term, sustainable economic growth.

He made these remarks at the ‘Unlocking the Capital Markets Potential for Banks’ conference held at a private hotel here. Jameel Ahmed noted that while macroeconomic conditions have improved, with inflation falling and growth gradually recovering, structural challenges such as low domestic savings persist.

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With a savings rate of just 7.4 per cent of GDP, compared to 27 per cent in South Asia, Pakistan remains overly reliant on external financing, contributing to recurring external account pressures and boom-bust cycles. The governor also spoke on the importance of robust capital markets in channeling domestic savings into productive sectors. He noted that well-developed, deep and diversified capital markets, complemented by a resilient banking system, are needed to support sustainable economic development of the economy.

He also outlined recent SBP reforms aimed at broadening participation in the country’s bond market, including the inclusion of non-bank institutions as Special Purpose Primary Dealers (SPDs) and expansion of Investor Portfolio Securities (IPS) accounts to microfinance banks, the Central Depository Company (CDC) and, the National Clearing Company of Pakistan Limited (NCCPL). These reforms open new investment avenues to millions of digital banking users and lay the foundation for broader market development, he said.

Despite progress in the government bond market, the central bank chief expressed concern over the limited development of corporate debt and equity markets. Outstanding corporate bonds account for less than one percent of GDP, with limited secondary market activity and low participation from non-financial sectors. Similarly, equity market penetration remains modest, with investor accounts and market capitalisation lagging behind peer economies.

The SBP governor concluded by calling for coordinated efforts among regulators, financial organisations, government institutions and investors to promote financial literacy, expand participation, and build a transparent, innovation-friendly market ecosystem.

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The conference was also attended by the Federal Minister for Finance and Revenue Muhammad Aurangzeb, PSX Chairperson Dr Shamshad Akhtar, PSX CEO Farrukh Sabzwari, SECP Chairman Akif Saeed, as well as banking sector representatives among other stakeholders.

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