IMPACT OF PRIVATIZATION ON NON-PERFORMING LOANS OF CONVENTIONAL COMMERCIAL BANKS IN PAKISTAN

Current study describes the effect of privatization on non-performing loans of conventional commercial banks in Pakistan to some extent. Process of privatization started from 1988 due to non-satisfactory performance of banks, as there was lack of lenders plans, weak credit operations, increased loans sizes and many other similar factors. Studies revealed the better performance of private banks as compared to government owned banks. Most important factor is about handling of non-performing loans which may be through early risk assessment, better law and order situations, regular monitoring and other similar factors. MCB, ABL, UBL and HBL banks were privatized in order to attain efficiencies and all of these banks showed significant improvement after the privatization. Values of non-performing loans is divided in to pre-privatization and post-privatization period and collected from Banking Surveillance Department (BSD) and from the official website of SBP. Graphical as well as analytical analysis is performed to judge the impact of privatization. Average values of non-performing loans showed a significant fall in the values of non-performing loans after the privatization. There are also some other forces for this improvement like the Banking Reforms. Due to these reforms the concept of corporate governance, risk assessment and loan portfolio management and some others were introduced. A very small proportion of people denied the importance of these reforms. A prominent improvement showed that privatization has reduced the values of non-performing loans.