ABSTRACT
Banking has a long history in South Asia, with the ancient 'Law of Manu' stating explicitly that, 'A sensible man should deposit his money with a person of good family, of good conduct veracious'. The great impetus for banking in South Asia during the colonial era was the Second World War. The Indian central bank, the Reserve Bank of India (RBI), was to function as Pakistan's central bank until the end of September 1948 and 30 percent of its financial reserves were to be transferred to Pakistan to establish its central bank, the State Bank of Pakistan (SBP). The original aim of nationalizing the Pakistani financial/insurance sector had been the laudable one of democratizing credit availability, expanding the banks' branch network and customer base to ensure greater access to the banks by the hitherto unbanked masses, and ensuring that the commercial banks took a longer term view of project finance rather than a commercially safer short-term perspective.
