The State Bank of Pakistan hosted the 25th Zahid Husain Memorial Lecture in Karachi, bringing together diplomats, academics, banking leaders, members of the business community, and the family of the late Zahid Husain to reflect on the evolving role of finance in economic development. The lecture series commemorates Zahid Husain, the first Governor of the State Bank of Pakistan, whose leadership laid the foundations of the country’s central banking framework.
The keynote address was delivered by Professor Amir Sufi, Bruce Lindsay Distinguished Service Professor at the University of Chicago and recipient of the 2017 Fischer Black Prize. In his lecture, Professor Sufi focused on the structural transformation of modern economies, highlighting how global growth is increasingly driven by high-tech and knowledge-intensive services such as information technology and professional scientific services.
He argued that these sectors rely heavily on intangible capital, including research and development, intellectual property, and specialized human expertise. Traditional banking systems, which are designed around physical collateral and liquidation values, are often ill-suited to finance such firms. As a result, innovative and high-growth businesses struggle to access financing despite strong future potential, as their value depends more on continuity and cash flows than on tangible assets.
Professor Sufi emphasized the need for financial intermediaries that specialize in intangible capital through cash flow-based lending and equity financing such as venture capital and private equity. He noted that for countries like Pakistan to nurture high-growth sectors, regulators must work together to create an enabling environment. This includes efficient bankruptcy systems that preserve business value and strong contract enforcement mechanisms for complex equity arrangements.
In his opening remarks, Deputy Governor SBP Saleemullah acknowledged improvements in macroeconomic stability but stressed that deep-rooted reforms are essential for achieving sustainable growth and avoiding repeated boom-bust cycles. He emphasized the importance of directing capital toward the real economy and described expanding financial access to SMEs, youth, and women as a critical requirement for inclusive growth. He urged banks to reduce reliance on traditional collateral and adopt cash flow-based lending supported by a better understanding of business risks.
The Deputy Governor also highlighted the central bank’s initiatives supporting this transition, including the risk coverage facility for SME and agriculture finance, the Banking on Equality policy, and the regulatory sandbox for fintech. These efforts, combined with digital infrastructure such as e-KYC and faster payment systems, aim to strengthen the foundation for technology-driven and inclusive economic growth.
The session concluded with an interactive fireside chat, during which Professor Sufi elaborated on policy priorities for Pakistan and addressed questions from the diverse audience, reinforcing the need to align financial sector reforms with the evolving structure of the economy.
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