Pakistan’s export sector is widely acknowledged as a cornerstone of the national economy, with the potential to generate employment, earn foreign exchange and drive industrial upgrading. Yet despite this promise, exports remain far below their achievable potential.
While structural issues such as energy costs, logistics and market access are often cited, one critical and underexamined constraint lies closer to home: the counterproductive role of Pakistani banks in facilitating exports.
Paradoxically, weaknesses within the banking system have created a vicious cycle in which foreign buyers lose confidence in Pakistani exporters; not because exporters lack capability or intent, but because financial intermediation consistently fails them at critical moments.
For exporters, timely access to predictable financial services is not a luxury; it is a prerequisite for credibility. In Pakistan, however, banks frequently function as bottlenecks rather than enablers. Excessive documentation requirements, prolonged approval timelines, and a deeply risk-averse institutional culture make export finance unnecessarily difficult to access, particularly for small and medium enterprises (SMEs).
Rules are often unclear, inconsistently applied, and subject to interpretations that vary from branch to branch or officer to officer. Informal influence and relationship-based decision-making further distort outcomes, granting preferential treatment to a few while imposing delays and procedural hurdles on others. The result is an uneven, opaque system that constrains exporters precisely when speed, certainty and reliability matter most.
A recurring irony in Pakistan’s banking landscape is the contrast between the ease of consumer lending and the resistance to productive finance. Loans for cars, appliances or smartphones are frequently approved within days. By contrast, requests for working capital to finance export orders, purchase machinery, or bridge shipment cycles are met with prolonged scrutiny and suspicion.
This imbalance reveals a misalignment of incentives. Banks appear more comfortable financing consumption (despite its limited economic multiplier) than supporting export- oriented production that generates foreign exchange and long-term growth. This misplaced priority directly undermines Pakistan’s export competitiveness.
Banking inefficiencies do not remain confined within Pakistan’s borders; they are transmitted directly to international markets. Delays in opening Letters of Credit or in Financial Instrument approvals, inconsistent compliance checks, payment-processing obstacles and foreign-exchange bottlenecks prevent exporters from meeting delivery schedules and payment expectations.
From the perspective of foreign buyers, these disruptions appear as exporter unreliability, weak financial standing, or poor governance. The distinction between exporters and banks is rarely apparent to overseas clients. As a result, reputations painstakingly built over years can be damaged or destroyed by failures that originate entirely within the domestic banking system.
Exporters consistently report banks’ reluctance to provide pre-shipment and post-shipment financing. Export lending is routinely classified as ‘high risk’, yet few institutions invest in developing the analytical capacity or sectoral understanding needed to manage that risk intelligently.
Collateral requirements are often unrealistic, especially for SMEs that may have strong order books but limited fixed assets. This leads to lost contracts, under-fulfilled orders and stalled growth, reinforcing foreign perceptions that Pakistani exporters lack scale or seriousness, when the real constraint is access to working capital.
While compliance with international standards is essential, Pakistani banks often implement these requirements through excessively bureaucratic and poorly communicated processes. Exporters face repeated delays not only because of formal regulations, but due to arbitrary interpretations and internal approvals that lack transparency.
In global trade, speed and predictability are competitive advantages. When exporters cannot confirm payment timelines or shipment clearances, buyers shift to suppliers in jurisdictions with more efficient banking systems. These delays are frequently misinterpreted as evasiveness or financial distress by Pakistani firms, further eroding trust.
In Pakistan, getting an export application approved on time is less about documentation and maybe more about genealogy, because when export applications and documentation are still on paper with the banks, it really helps if the bank manager is your cousin and coincidentally the least qualified person in the room.
How can Pakistani companies wait patiently, sometimes for more than one week, only to be permitted by their banks to ship their exports? In global trade, when an order is completed, it is difficult to understand why Pakistani banks would require more than three hours to process it.
In many countries, banks play an active role in supporting exporters through advisory services, offering guidance on market entry, currency risk management, trade finance structuring and regulatory compliance. In Pakistan, such services are largely absent or superficial.
As a result, exporters rely on fragmented information and informal networks, limiting their ability to diversify markets, upgrade standards or respond to changing global requirements. This institutional gap further weakens exporters’ standing in the eyes of sophisticated international buyers.
Rigid foreign exchange controls, implemented with little commercial flexibility, present another major obstacle. Exporters are often required to repatriate proceeds within strict timelines that do not reflect the realities of international trade cycles. Genuine delays (caused by buyers, shipping disruptions or disputes) are rarely accommodated.
Similarly, remitting funds for legitimate business expenses abroad, such as trade fairs or technical services, is cumbersome and unpredictable. Foreign partners, unaware of these constraints, may conclude that Pakistani exporters lack professionalism or operational capacity – again, misattributing systemic failures to individual firms.
We also cannot forget that, under current regulations, export remittances are systematically converted into Pakistani rupees. Of course, some exporters may have the right to retain a portion of these proceeds in a foreign exchange account, and in this case, it helps to be familiar with the bank’s officials.
If Pakistan is serious about expanding its export base, banks must transition from gatekeepers to enablers. This requires the development of export-specific financial products tailored to trade cycles; the digitisation and standardisation of compliance processes; a shift towards sectoral risk assessment rather than blanket risk aversion; the embedding of export advisory services within banks; and the expansion of credit guarantees, export insurance and risk-sharing mechanisms supported by regulators.
Export growth is not solely the responsibility of exporters or government agencies. Banks are a critical link in the value chain, and their current practices impose reputational costs on exporters that far exceed the risks banks seek to avoid.
Until this imbalance is corrected, Pakistani exporters will continue to be judged in global markets for failures that are not their own, undermining both national credibility and long- term economic growth. A more facilitative banking environment would not merely support exporters; it would restore confidence, unlock latent capacity, and position Pakistan as a reliable trading partner in the global economy.
The writer is a gem and mineral exporter. He can be reached at: [email protected]
