Functions of Commercial Banks In Pakistan.Commercial banks in Pakistan perform a wide range of functions, which can be broadly categorized into the following:
- Accepting Deposits: Commercial banks accept deposits from the general public in various forms such as current deposits, savings deposits, fixed deposits, and recurring deposits.
- Lending Money: Commercial banks lend money to individuals and businesses for various purposes such as working capital, investment in fixed assets, and consumption.
- Credit Creation: Commercial banks are responsible for creating credit by extending loans and advances to customers. This credit creation function helps to stimulate economic activity and growth.
- Clearing and Settlement: Commercial banks act as intermediaries in the process of clearing and settlement of cheques, bills, and other payment instruments.
- Foreign Exchange Services: Commercial banks facilitate foreign trade by providing services such as currency exchange, letters of credit, and international fund transfers.
- Investment Banking Services: Commercial banks also provide investment banking services such as underwriting securities, managing initial public offerings (IPOs), and providing advisory services on mergers and acquisitions.
- Treasury Operations: Commercial banks manage their own treasury operations by investing in government securities and other financial instruments to earn profits.
- Electronic Banking Services: Commercial banks offer various electronic banking services such as ATM cards, debit cards, online banking, and mobile banking to provide convenient and secure banking services to their customers.
Overall, commercial banks in Pakistan play a critical role in the economy by mobilizing savings, providing credit, and facilitating financial transactions.
Functions of Commercial Banks In Pakistan In Economic Development Of PAKISTAN.
The commercial banks are playing very effective role in the economic development of Pakistan since 1947. After the creation, the banks paid more attention to following areas:
- Increase in savings.
- Allocation of funds to demanding sectors.
- Formation of new industrial base.
- E nancing for the promotion of trade and commerce.
The performance or role of commercial banks in stimlating economic growth can be judged through following points:
- Mobilization of Deposits:
Increase in savings or deposits is very much necessary for economic prosperity and advancement. Because, more savings or deposits means more investments for productive process. In this regard, the role of commercial banks is prominent in both the pre and post nationalization era. The commercial banks created awareness and importance of saving among the people which can be checked from following data:
| Year | Total Deposits of Schedule Banks |
| Dec. 1977 | 42,495 (in million Rupees) |
| Dec. 1980 | 69,975 (in million Rupees) |
| Dec. 1982 | 97,810 (in million Rupees) |
| Dec. 2002 | 1,532,168 (in million Rupees) |
| Dec. 2005 | 2,161,098 (in million Rupees) |
| June. 2011 | 5,489,300 (in million Rupees) |
| June. 2014 | 8,051,600 (in million Rupees) |
| June. 2017 | 11,980,697 (in million Rupees) |
- Advances:
In order to increase the rate of economic growth or to make rapid economic development, the commercial banks made investments in variety of sectors of economy and to various economic groups. Before nationalization, revolutionary development in industrial sector was took place due to the valuable contribution of commercial banks, which can be proved by following statistics.
| Year | Total Advances of Schedule Banks |
| Dec. 1977 | 31,760.7 (in million Rupees) |
| Dec. 1980 | 47,627.7 (in million Rupees) |
| Dec. 1982 | 67,610.3 (in million Rupees) |
| Dec. 2002 | 1,000,331 (in million Rupees) |
| Dec. 2005 | 2,043,982 (in million Rupees) |
| June. 2011 | 3,310,800 (in million Rupees) |
| June. 2014 | 4,068,000 (in million Rupees) |
| June. 2017 | 6,176,306 (in million Rupees) |
- Agriculture Credit:
Before nationalization, the commercial banks did not pay proper attention to promote agriculture sector. But after nationalization, the banks were directed to provide finance to agriculture sector on very favorable terms for the purchase of seeds, fertilizers, agricultural tools and for the development of lands etc. This greatly helps the formers to improve the productivity techniques and to increase the production.
- Reducing Capital Flight:
Capital is very much necessary for the economic development of any country. If role of commercial banks is not appropriate regarding the investment of people savings then the people can make investments in foreign markets. The commercial banks have played an important role in satisfying the needs of investors by mobilizing the savings into productive sector.
- Agency Services:
In the beginning, the people were not used to enjoy the banking services for their ease and benefit. However, the banks increased the awareness among the people. Now a variety of agency services provided by banks are facilitating the both general public and business community.
- Export Promotions:
Commercial banks of Pakistan have played a great role in promoting exports of the country. Almost all the banks have established export promotion cells, which provide guidance and information to exporters.
- Facilitating Foreign Trade:
The commercial banks of Pakistan are very helpful in the promotion of international trade. Exports and imports are conducted through commercial banks. Foreign exchange transactions on the behalf of importers and exporters are carried through commercial banks, which in turn leads to economic development.
- Trade and Commerce Promotion:
In the beginning our trade activities were very slow and small in volume. Commercial banks contributed a lot towards the promotion and development of trade and commerce. The business of shares and bonds and our today’s capital market owes a great to commercial banks.
- Employment Opportunities:
Commercial banks provided finances for establishment of different long-term development projects. This created numerous different types of jobs, which helped in reducing unemployment from the economy.
- Innovation:
Commercial banks provided finances for new types of industries and projects. This not only proved to be the source of encouragement for new talented managers also led to innovation which increased the pace of development.