KARACHI: Muhammad Aurangzeb, CEO of Habib Bank Ltd, has said that if the current uncertainty lasts for a few more months, the banking sector will be exposed to a “systemic risk.”
Speaking at a summit on financial crimes, the CEO of the largest commercial bank warned the participants about a “big blow to the economy” if the stakeholders didn’t make the right decisions swiftly.
“Timely choices and timely implementation are necessary. We won’t renounce our commitment to the IMF (International Monetary Fund) program… Whoever comes (to power) after the election will have to deal with the IMF,” he said.
The government has been putting off structural reforms like adjusting electricity tariffs for many months. The IMF’s funding has been disbursed with excessive delays due to its unwillingness to make difficult choices. Due to the severe lack of dollars that has resulted, even imports of basic essentials like food and electricity are becoming problematic for the country. The industrial sector, which has declared a string of operational shutdowns due to the lack of industrial raw materials, cannot obtain letters of credit since banks lack the capital to do so.
“If you see the last 18 months, IMF on, IMF off,” said Mr Aurangzeb in a moment of exasperation. The prolonged spell of indecisiveness on the IMF issue is causing “economic stress” even though banks have “kept the show on the road” in terms of financing, he said.
The best way to fight financial crimes is to improve transaction monitoring and strengthen the know-your-customer (KYC) regime, he said. “It’s the banks’ first line of defense,” he noted.
