1. Problem of loan recovery.-----Specially In Rural Area
2. Small coverage.-----more than 6 lakh Villages in India and banks only 35000 branches
3. Changes in credit-Deposit ratio------In different cities
4. Ineffective control & regulation.------ Specially in remote areas.
There is a mini revolution in the financial sector of the economy in Pakistan. The liberalization of the exchange control large scale privatization of state enterprises, opening of new banks in the private sector, deregulation of credit controls, conversion of Islamic banking etc. have brought about radical changes in the banking sector. The banks are rapidly equipping themselves for the new role to be played in meeting the challenges faced by commercial banking. The main competition challenges faced by commercial banking in Pakistan are as under:
Change in market needs: Due to privatization of state owned enterprises deregulation environment, free capital flow in and out of Pakistan, the banks are now to focus greater attention on meeting the market needs of the customers. The banks which solve the customer's problems for enlarging the sale of the product will receive higher reward. The traditional role for providing trade finance only is now regulated to the background.
Service to customers: The banks which can provide speedy, accurate and standard service in the delivery of products and loans to the customers will be a success. The other will be chipped away.
Regulatory challenge: The banks shall have to work within a regulatory frame work that protects the interest of the depositors and ensures the provision of capital to the customers.
The challenges and prospects commercial banks face