The banking industry in Pakistan dates back to the era of British colonialism. In 1947 the banking industry in Pakistan surged with the formation and increased popularity of Habib Bank and The State Bank of Pakistan.
Habib Bank was first formed in 1941 followed by the State Bank of Pakistan (SBP) which was established under the influence of the quasi government. Both these banks were domestic banks that were initially encouraged to develop into commercial banks in the country. National Bank and Allied Bank soon followed and provided customers with a widened selection of financial products to suit the Pakistani economy.
From the 1970's -1990 the Pakistan banking industry grew considerably and commercial banking was becoming increasingly popular. Zulfikar Ali Bhutto established the nationalisation policy under government rule which enabled the establishment of a further six consolidated banks.
The financial sector post the 1990's grew to cater for businesses, commercial clients and CEOs and many loans were granted to cater for customers individual requirements. The increased amount of loans being issued brought difficulty to banks in Pakistan as they started to lose full control.
It was at this stage that Bhutto decided to amend the Nationalisation Act in 1991 and ushered reforms to get the banking industry in Pakistan back on track.
In 1997- 2006 banks in Pakistan were under control of their issuances of services and the industry began to prosper. From 2006 to the present the industry has seen a vast improvement with many banks in Pakistan excelling and seeing an unprecedented amount of clients and investments. Inevitably there are still challenges that need to be overcome in Pakistani banks such as the need for standardisation in Islamic banks but the future looks bright with continued growth.