He was addressing banks and finance professionals at the 55th Annual General Meeting of the Institute of Bankers Pakistan (IBP) at its premises on Saturday.
The SBP Governor deplored the culture of the banks, "mired in negative attitude and non-co-operative mindset" that were the legacy of the past. He referred to the role, which the SBP has played during the past six years and had curbed such tendencies a lot, but more effort was in the pipeline to eradicate the problem completely.
He said that highest state of integrity was required from the bankers to achieve high standards expected of them.
He said that the lending rates had reached 5 percent and only this year they climbed to 8 percent. The lowering of lending rates increased the credit to the private sector by a whopping 100 percent during the six-year period.
The Governor said that lending to the agricultural sector had spiralled to Rs 130 billion from Rs 38 billion per year, and SMEs were now getting about 17.5 percent of total private sector credit, and consumer financing had also done well.
He advised the banks to give reasonable rate of returns to depositors to check the deposits being funnelled to other sectors. He said that the banking industry needed a decent turnaround to wipe out the bad memories of past years when it was in tatters.
He warned the bankers about what he called "dazzling temptation" to do unethical things as nobody was looking at them. But curbing that temptation would cement their sterling qualities. It would infuse honesty and integrity in them, he added.
He advised the bankers to keep their lifestyle in some reasonable check as they were under scrutiny by general public. "Ostentatious lifestyles of bankers do not go unnoticed or un-commented. Please do not delude yourself because the most valuable asset you posses is your professional integrity; and do not destroy it by indulging in practices that are contrary to the basic ethical standards of the profession."
He advised against the callous and irresponsible conduct as it could tarnish the image of the entire banking profession. He hinted about the big business houses, owned by the families and their practice of getting hold of bank management and pressures on the staff to indulge in unethical business practices. He said that SBP inspection teams would discover such malpractice's and the staff would find itself in hot waters.
He urged the Pakistan Banks Association (PBA) to develop a code of conduct for all bankers in the country and have an oversight committee that should wield powers and authority to punish the wrongdoers.
Saleem Umar, Chief Executive, IBP, highlighted the colossal educational and training efforts of the Institute, "that is rightly regarded as the Knowledge Institute".
He said that 20 overseas co-ordinators from USA, Canada, and Asia were appointed by IBP to help the Institute in its academic pursuits.
He said that IBP had chosen Abu Dhabi, Jeddah and London as recruitment test centres, while New York and Toronto are being considered for expanding the centres.
He said that IBP was co-ordinating with many countries in the field of training and research. Those countries are India, Germany, Malaysia, Bangladesh, and more countries were being considered to spread the academic net.
Saleem said that IBP has begun a training programme in Afghanistan and it is co-ordinating with Afghanistan International Bank (AIB), the central bank of Afghanistan.
The IBP chief expressed hope that the Institute would become a 'centre of excellence' for bank and financial training in Asia. He said that its stress was on human development and research, with three elements for progress: attitude, challenging the frozen mindset and unleashing the hidden ability of the banks and financial institutions.
The IBP continues to enhance its educational standards and from November 2005 overseas academics and professionals would be visiting the Institute. They would share their knowledge and expertise with banking professionals here. He proudly announced the publication of a bilingual glossary (Urdu/English) by the Institute. The Institute had also initiated three overseas scholarships of Rs one million each, he added.
Aftab Ahmad Khan, Vice President, IBP, presented vote of thanks in a witty and very literary style. He also presented his book on Economics to the SBP Governor.
Dr Ishrat Husain distributed certificates to the newly graduated batch of female branch managers.