The Financial Infrastructure of Pakistan

The Financial Infrastructure of Pakistan: A Comprehensive Overview (2025)

(Research and data compiled by Abdullah Mahmood. Errors, if any, are due to omission.)

Introduction

Pakistan's financial infrastructure in 2025 is a complex and evolving system that includes a wide range of institutions, regulatory bodies, and digital innovations. Over the past decade, the country has made significant progress in expanding financial inclusion, promoting Islamic banking, and developing secure, tech-driven solutions. This comprehensive overview explores all key sectors of Pakistan's financial system, including commercial banking, Islamic finance, digital payments, SME financing, remittances, monetary policy, fintech, and regulatory structures.

Banking Sector Overview

Structure and Composition

As of mid-2024, Pakistan’s banking sector includes 55 banks and Development Finance Institutions (DFIs), operating through more than 18,450 branches. The sector has demonstrated robust growth, with an 11.5% expansion in the first half of 2024, largely driven by asset growth, increased investments in government securities, and a surge in deposits.

Profitability and Asset Quality

In 2023, the banking sector's after-tax profit rose to Rs. 642.2 billion, nearly double the previous year's earnings, largely due to the high policy rate and increased returns on government securities. Non-performing loans (NPLs) remained under control, with a slight increase, while the provisioning coverage ratio improved to 105.3% by June 2024. This reflects banks' prudent risk management and stronger balance sheets.

Capital Adequacy and Solvency

The Capital Adequacy Ratio (CAR) improved from 17.8% in 2023 to 20.0% in mid-2024. This increase indicates a well-capitalized banking sector capable of absorbing shocks. The adoption of IFRS-9 and stronger supervisory mechanisms by the State Bank of Pakistan (SBP) have further enhanced the sector's solvency.

Islamic Banking

Growth and Market Share

Islamic banking in Pakistan has grown rapidly. By the end of 2024, Islamic banking assets reached nearly Rs. 10 trillion and deposits crossed Rs. 8 trillion. There are now over 4,500 Islamic banking branches across the country. The market share of Islamic banking in total assets stands around 22%, showing strong public demand for Shariah-compliant products.

Regulatory Developments

Following the Federal Shariat Court’s ruling in 2022 to eliminate Riba (interest) from the economy, a constitutional amendment was passed in 2024, targeting a fully interest-free financial system by January 1, 2028. The SBP has issued multiple guidelines to streamline Islamic finance, including a mandate that Islamic banks must pay at least 75% of gross yield as profit on savings deposits.

Financial Inclusion and Digital Transformation

National Financial Inclusion Strategy (NFIS)

The NFIS was launched in 2015 with the target of increasing formal financial account ownership among adults from 16% to 75% by 2028. As of 2023, the inclusion rate had reached 64%. The strategy focuses on improving access to financial services for women, rural populations, and youth. Key pillars include digital payments, rural financing, SME access, and consumer protection.

Digital Payment Systems

Pakistan has made tremendous progress in digital finance. The Raast payment system, launched by SBP, now facilitates peer-to-peer (P2P) and person-to-merchant (P2M) transactions. As of early 2025, SBP mandated that all e-commerce platforms and major payment gateways integrate with Raast P2M. Leading players like Payfast, 1Link, and Easypaisa are already integrated. This digitization helps reduce cash dependency and supports the formal economy.

Remittances and Cross-Border Integration

Remittances are a key pillar of Pakistan’s foreign exchange earnings. In 2024, remittance inflows from abroad crossed $35 billion. To enhance efficiency, SBP signed an MoU with the Arab Monetary Fund to integrate Raast with the “Buna” regional payment system, making remittance flows from GCC countries faster, safer, and cheaper.

Small and Medium Enterprises (SMEs)

Financing Initiatives

SMEs contribute nearly 40% to Pakistan’s GDP and employ over 80% of the non-agricultural labor force. To promote SME financing, SBP revised exposure limits in 2023 and introduced a risk-sharing scheme that offers partial credit guarantees. The goal is to double SME lending to Rs. 1.1 trillion by 2029. SBP has also allowed simplified KYC procedures for smaller enterprises.

Challenges

Despite these measures, SMEs face difficulties in accessing affordable credit due to high interest rates and collateral requirements. Furthermore, financial literacy and limited formal documentation remain major hurdles.

Non-Bank Financial Institutions (NBFIs)

Growth and Diversification

NBFIs include leasing companies, investment banks, housing finance companies, and modarabas. These institutions are playing an increasingly important role, particularly in real estate and consumer financing. In 2021, growth in NBFIs stood at 190%, and the trend continued into 2023-24 with diversification into agri-finance and micro-mortgages.

Microfinance Sector

Microfinance has seen strong growth with providers like Khushhali Bank, FINCA, and U Microfinance Bank expanding their reach. The sector caters to underserved populations in rural areas and supports small entrepreneurs. Innovative digital lending products and mobile wallet integration have helped microfinance institutions (MFIs) increase their outreach in remote regions.

Regulatory Framework and Supervision

Legal and Regulatory Environment

The regulatory environment is governed primarily by the State Bank of Pakistan Act, 1956; the Banking Companies Ordinance, 1962; and the Microfinance Institutions Ordinance, 2001. These laws establish a strong framework for the licensing, supervision, and governance of banks and financial institutions. Pakistan has also adopted international standards such as Basel III.

Supervisory Measures

To address emerging risks, SBP has established dedicated departments such as the Cyber Risk Management Department (CRMD) and the Financial Institutions Resolution Department (FIRD). These units monitor cybersecurity and ensure timely intervention for distressed institutions, respectively.

Monetary Policy and Interest Rates

Policy Rate Adjustments

In 2023, Pakistan maintained a high policy rate of 22% to manage inflationary pressures. However, by the end of 2024, the rate was gradually brought down to 13% to stimulate growth and support credit expansion. This easing cycle was aligned with declining inflation and currency stabilization.

Impact on Deposits and Lending

The high-interest rate environment during 2023-24 encouraged deposit growth, reaching Rs. 31.4 trillion by November 2024. However, private sector lending remained sluggish, partly due to high borrowing costs and economic uncertainty.

Fintech Ecosystem

Growth and Innovation

Fintech startups have expanded rapidly in Pakistan, offering digital wallets, peer-to-peer lending, wealth management apps, and e-commerce payment solutions. By 2025, there are over 250 active fintech firms. Popular platforms include Easypaisa, JazzCash, Nayapay, and SadaPay. These firms are helping bring banking services to the unbanked and underbanked populations.

Digital KYC and E-Money Institutions

SBP introduced a digital Know-Your-Customer (KYC) framework that allows banks and fintechs to open accounts via mobile apps and biometrics. Several Electronic Money Institutions (EMIs) have been licensed and are offering innovative services such as prepaid cards, utility bill payments, and budget planning tools.

Insurance and Takaful Sector

Conventional and Islamic Insurance

Pakistan’s insurance penetration remains low at around 0.9% of GDP. However, the sector is gradually expanding, with a growing preference for Islamic insurance (Takaful). The Securities and Exchange Commission of Pakistan (SECP) regulates this sector and has introduced digital insurance models to boost coverage and efficiency.

Pension and Capital Markets

The National Savings Scheme (NSS), Voluntary Pension Schemes (VPS), and Employees Old-Age Benefit Institution (EOBI) form the backbone of Pakistan’s pension system. Meanwhile, the Pakistan Stock Exchange (PSX) has launched new products like ETFs and Sukuk listings to attract investors. Capital market reforms are being implemented to boost transparency and liquidity.

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Why Release Matters

Ejaculation is a normal and natural thing for both guys and girls once they hit adulthood. It’s part of how the body works, keeping everything running smoothly, both physically and mentally. If you don’t release, you can feel irritated, stressed, or even get random mood swings. It’s like the body’s way of saying, "Hey, I need a break!"

For guys, ejaculation clears out old sperm, which is important for keeping the reproductive system fresh. Plus, it helps with hormone balance, keeping testosterone levels stable. Regular release is also linked to a lower risk of prostate problems later in life. And let’s not forget that feeling of relaxation afterward—it’s because the body releases feel-good hormones that reduce stress and help with sleep.

Girls might not "ejaculate" the same way, but orgasms are just as important. They help with blood circulation in the pelvic area, keep the muscles down there active, and even reduce period cramps. Some women experience squirting, which is also completely normal. Sex or masturbation can improve mood, relieve stress, and even make sleep better.

Masturbation, whether you're a guy or a girl, is completely normal. It’s a safe way to explore your body, learn what feels good, and release built-up tension. There are no negative side effects unless it’s interfering with daily life. In fact, science backs it up—it helps with relaxation, reduces anxiety, and even boosts confidence.

Ignoring your sexual urges can lead to frustration and unnecessary stress. Some cultures or beliefs might make people feel guilty about it, but medically speaking, it’s a natural part of life. As long as it’s balanced and not taking over responsibilities, it’s actually good for you.

At the end of the day, taking care of your sexual health is just as important as taking care of your physical and mental well-being. So, whether through sex or self-pleasure, regular release keeps your body in check and your mind at ease.

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WHAT is NFT Treasure?

Greed blinds people, making them easy prey for scams like NFT Treasure. This scheme, just like before, is nothing but a fraud designed to loot hard-earned money from innocent Pakistanis. It will run for a short time, lure in thousands of investors with false promises, collect a massive amount of money, and then vanish just like every other Ponzi scheme before it.

Every year, countless pyramid schemes emerge in Pakistan, all following the same pattern. They attract people with fake success stories, unrealistic profit margins, and flashy advertisements. The sad reality is that despite witnessing so many financial scams in the past, Pakistanis continue to fall for them.

The root cause is not just greed but also ignorance. A lack of financial awareness makes people easy targets, while desperation for quick wealth blinds them to the obvious red flags. Instead of questioning the legitimacy of such schemes, they rush in, hoping to make easy money only to be left with nothing when the scam collapses.

The cycle repeats every year. A new name, the same fraud, and yet another wave of victims. People never learn, and that’s why these scams keep thriving.

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A Costly Lesson in Crypto

The cryptocurrency market has been a rollercoaster ride for millions around the world. While some have made life-changing profits, others have lost everything, struggling to recover both financially and emotionally. It’s a space filled with excitement, risk, and sometimes, heartbreaking consequences.

One young Chinese recently shared his painful experience (his screenshots are attached), revealing the darker side of investing:

"I'm sorry, Mom and Dad. I may never be able to afford a wife in this lifetime because I've lost all my money in the crypto market. I can't sleep well at night, I don't want to play anymore, but I want to break even. If I work as a screw worker for a month and earn an extra five thousand, can I still break even?"

This post speaks volumes about the dangers of entering the financial markets without proper knowledge, risk management, or a long-term strategy. Many people, especially young investors, see crypto as a quick way to make money. Influencers, social media hype, and success stories of overnight millionaires create an illusion that investing is easy. But the reality is far more complex.

The Emotional Toll of Financial Loss

Losing money in investments is not just a financial setback; it takes a serious toll on mental health. Anxiety, stress, sleepless nights, and depression are common among those who suffer big losses. This young man’s message reflects the deep regret and helplessness many feel when they realize their financial situation has spiraled out of control.

Many traders enter the market with the mindset of "playing a game" or "taking a bet," hoping for fast profits. But the crypto market is highly volatile and unpredictable. When losses start piling up, the desperation to recover often leads to even riskier decisions—borrowing money, making emotional trades, and chasing losses. Unfortunately, this cycle often leads to even greater financial ruin.

The Importance of Smart Investing

This story serves as a crucial reminder that investing requires careful planning and discipline. Here are some key lessons to take away:

1. Never invest more than you can afford to lose – Treat investments like a calculated risk, not a gamble. If losing that money would ruin your life, you’re investing too much.

2. Have a long-term perspective – The market moves in cycles. Short-term losses don’t mean failure unless you panic and sell at the wrong time.

3. Diversify your investments – Putting all your money into one asset is extremely risky. Spreading your investments across different areas reduces risk.

4. Learn before you invest – Understanding market trends, risk management, and investment strategies can make all the difference. Blindly following trends or influencers is a recipe for disaster.

5. Protect your mental health – Financial loss is hard, but your well-being matters more. If investing is causing stress and sleepless nights, it’s time to step back and reevaluate.

Moving Forward After a Loss

For those who have lost money, like this young man, it’s important to remember that financial recovery is possible. It may take time, effort, and discipline, but there is always a way forward. Instead of chasing losses, focus on rebuilding with smarter financial habits.

• Learn from mistakes and avoid repeating them.
• Start with small, safer investments before taking bigger risks.
• Build a stable income source before investing again.
• Seek advice from experienced investors or financial experts.

At the end of the day, money can be earned again, but peace of mind and mental health are irreplaceable. Let this young man’s story be a lesson for all—invest wisely, think long-term, and never let money control your happiness.

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ChatGPT roasted me

I asked ChatGPT to roast me, and this is what ChatGPT replied:

You call yourself a lecturer, but half the time, your sentences need autocorrect like a toddler learning to type. You’ve got two master’s degrees, yet somehow, the biggest challenge in your life is picking a proper blog title. You dream of buying a Boeing like it’s a second-hand Honda, but let’s be real—your wallet probably cries when you order extra toppings on a pizza.

You lived in Istanbul for two years, yet your Turkish is probably still at "Merhaba" and "Teşekkürler" level. You came back to Pakistan and started complaining about the heat like you weren’t born here. You flex about digital payments, but let’s face it—you check your balance after every transaction like it's a horror movie jump scare.

You're getting married soon, but does your future spouse know they’re signing up for a walking encyclopedia of random game facts and unfinished projects? You made videos on Far Cry and Tomb Raider evolution, but the only evolution you need is one where you learn to finish what you start.

You wanted a brutal roast? Well, here’s the truth—your biggest enemy isn’t life, it’s your own ability to overthink, underact, and keep revisiting the same topics like a stuck record. Now go sip some Quetta Karachi Café tea and reflect on how I just cooked you better than any restaurant ever will.

Oh, you think that was the end? That was just the warm-up.

You out here flexing like a Tech-Finance-Environmental guru, but the only green revolution you’ve led is switching from Windows to Linux and back. You have a whole MBA, yet somehow, your biggest financial win is a NayaPay cashback. You want to buy a Boeing? Bro, have you even paid off your last Gmart shopping spree?

You made a jet stunt video, but the only thing doing stunts in your life is your attention span—jumping from one unfinished idea to another. You lived in Istanbul for two years, yet Turkish shopkeepers probably still looked at you like "Another tourist who thinks ‘Abi’ is enough for survival."

And let’s talk about your Facebook page—you’re posting 90s game nostalgia like it's a history lesson, but let’s be real: most of your audience was born after 2005 and doesn’t even know what a floppy disk is. Your Project IGI upload? Yeah, the only "mission success" there is you finally completing something for once.

Marriage is around the corner, huh? Hope your future spouse knows they’re marrying a man who overanalyzes airline disputes like it's a PhD thesis. You think you’re a legend, but the only thing you’re dominating is the "edit post" button on your blog.

You wanted brutality at its peak? This ain't just a roast—this is your digital obituary, my guy. Now go recover from this intellectual fatality and try to exist without questioning every life choice you've made so far.

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