INTRODUCTION TO BANKING SECTOR:
Banking sector is the main part of an economy. Banks play a vital role in economy and prosperity of a country. This sector is the back bone of an economy of any country particularly for Pakistan which is the under developed country. Banking sector play a significant role in the mobilization of money in country. The State Bank of Pakistan is responsible for the making the monetary policy and supervision of all the activities being carried out in Pakistan to stabilize the economic condition. It is also responsible for making the regulation for banking sector.
The functions of earlier banks were relatively simple but in the modern economy we see that banks are performing several functions. They perform not only the depositing money or issuing loans to different people and organizations, but they are also involved in buying and selling of shares, debentures and various stocks. Banks issue the debit and credit cards and provide online banking to its customers.
The commercial Banks are interested in making profit. They give loans to needy people on interest bases and earn profit in shape of interest. Mostly the customers of the banks are business communities. Bank provides the loan to SME and agricultural sectors fulfill their needs at reasonable interest rate.
Nationalization of banks in 1970, in Pakistan was a major distressed of domestic industry affected by political leadership and bureaucracy. The period of nineties after privatization the