muhammad kamran shehzad : combating corruption in the banking sector keynote address by mr muhammad kamran shehzad, deputy governor of the state bank of pakistan, at the seminar on collaboration of banking sector and financial institutions with the national accountability bureau ( nab ) in combating corruption, karachi, 5 october 2010. * * * ladies and gentlemen, it is my pleasure and privilege to address this august gathering of eminent bankers, financial experts and other stakeholders. let me first state clearly that coordination & co - operation of the banking sector as well as regulator with national accountability bureau is of prime importance in combating corruption and corrupt practices in the banking sector. the majority of banking cases are white color crimes done in such a professional manner that their detection and subsequent preparation of strong cases is an uphill task. even in the developed economies prevention of white colour crimes, remains a big issues to tackle. in pakistan corruption is a major cause of concern in majority of public sector organizations which has weakened their strength and efficiency and thus they have become a burden on the exchequer. the critical factor behind such failures are mis - management, bad human resource management, immorality, in efficiency and greed. corruption reduces the welfare activities of the society due to loss of efficiency and effectiveness, reduction of the revenue available for development work and thus weaken the system. ladies and gentlemen, the behavior and culture of banking sector has altogether been changed in the last two decades. it has transformed itself from 85 % in public sector in 1990 ’ s, to present more than 80 % in private sector. this quantum change has been taken positively & supported by the state bank. the newly transformed private banking sector is performing responsibly and cooperating with regulators and investigating agencies for eradication of banking crimes. sbp and nab since its inception in collaboration with each other had agreed on a joint mechanism through which information required for investigation purposes from banking sector, under section 19 of national accountability ordinance, 1999, are obtained through sbp in the greater interest of the fragile economic conditions of the country. although nab has absolute powers to obtain these information directly from the banking company yet the collaboration was made to repose confidence in banking community. a dedicated nab cell at sbp was established which effectively coordinates with banks / dfis to ensure expeditious supply of information. the whole process is aimed at facilitating the bureau in discharge of its responsibility of vital national interest, without unduly disrupting the financial institutions

to allow a milder fiscal adjustment path for spain, in particular for 2013 and 2014, which is more consistent with the current macroeconomic conditions and those that will prevail in the coming years. for this improved credibility to take root, the deficit targets must be met. information on the budget outturn in 2013 is still limited. in the first half of the year, the deficit improved relative to the same period a year earlier ( without considering the impact of the assistance to the financial sector which, as is known, does not count for these purposes ). the budget outturn in the second half of the year must, therefore, be very strict at all levels of government if slippage is to be avoided at the end of the year. while there are risks, i trust we can meet the target this year of cutting the deficit to 6. 5 %. the headway in budgetary consolidation should not mask the fact that the effort needed to ensure spanish public finances are redressed is still most considerable. let us not forget the distance still existing between the present situation and the requirement set in the stability pact and in the new budgetary stability law for the medium term, which is to have a structural balance in equilibrium. closing this gap will require further adjustments that will never prove easy because restoring growth will be a gradual process. we must also be mindful of the problems posed by the dynamics of the public debt / gdp ratio and its perspectives in the short term. so far, and as is usual in the initial phases of fiscal consolidation processes, this ratio has continued growing, with a forecast for 2014 of 98. 9 % of gdp. reversing this trajectory is vital for ensuring the future sustainability of public finances, but it will require running primary surpluses for a prolonged period ; naturally, the sooner we achieve sustained economic growth, the smoother this adjustment process will be. to tackle these challenges, institutional developments geared to ensuring budgetary rigour must be pursued. the independent fiscal responsibility authority, which will foreseeably start up in 2014, must reinforce the quality and independence of budgetary programming. here i would like to mention the planned review of regional government financing arrangements and the creation of the committee of experts for the reform of the tax system, who are expected to submit their report in the coming months. bis central bankers ’ speeches as for the public pension system, i shall reiterate what i said before the economic affairs committee last june on the presentation of the annual report of the