ISLAMABAD, Oct 24: The World Bank has approved a $300-million credit for Banking Sector Restructuring and Privatization Project to assist the ongoing banking reform programme.

According to an announcement made by the local World Bank office here on Wednesday, the new 300 million dollar credit had been approved by the Bank on Tuesday. Earlier, the bank had approved 350 million dollar Structural Adjustment Credit for Pakistan to alleviate poverty and improve the growth rate.

Pakistan is working to develop a competitive private banking system, free from the interference of vested interests and operating under a strong regulatory framework. It is also developing a more effective banking court system.

The main objective of the World Bank’s work in Pakistan is to reduce poverty. Recent cross-country empirical research by the bank has shown that a sound and efficient financial system leads to higher growth, by as much as two per cent annually. A healthier and more efficient banking system would contribute greatly to poverty reduction by improving the country’s prospects for growth, enhancing its capacity to deal with volatility mitigating the risk of financial crisis and improving the access of poor people to financial services.

“Pakistan has made good progress in reforming its banking system over the past four years”, said Joe Pernia, World Bank Lead Financial Sector Specialist for the South Asia Region.

“However, due to weak market conditions, a poor foreign investment climate and weak financial position of banks, the bank privatization has not yet materialized. The government is now promoting the expansion of private financial institutions. At the same time it is strengthening regulations needed to shield state-owned financial institutions from political interference and to protect consumers rights”.

“All Pakistan’s citizens, from important business interests to the smallest personal account holder, deserve to have access to secure banking and credit. Achievement of the country’s vision for a healthy and efficient banking system will give them that while eliminating abuses in the system,” he added.