Consumer Financing Pakistan -Thesis

| 2009 |

| Seminar in Economic Policy Faculty : M.Ashraf JanjuaBy: Shiekh Hammad Amjad Id: 2005-2-50-4862 |

[ Thesis on “Consumer Financing”] |

Analysis of Consumer Financing in Pakistan |

Fall

Table of Content

ACKNOWLEDGEMENT 5

LETTER OF TRANSMITTAL 6

Executive Summary 7

Introduction 9

Background 9

Purpose 9

Objective 9

Main Objectives: 9

Scope & Limitation 9

Assumptions 9

Study Plan 10

Consumer Financing 11

Introduction 11

Defining ‘Consumer Financing’ 11

Key Issues in Consumer Financing: 12

An Overview 12

Objectives of the Study 12

Regulatory Framework for Consumer Financing 13

Prudential Regulations for Consumer Financing 13

Minimum Standards for Consumer Financing Activities 13

Information Disclosure 14

Exposure Limits 14

Margin Requirements 14

Borrower’s Eligibility 15

Insurance Premium 15

Auto Loans 15

House Financing 15

Personal Loans 16

Credit Information Bureau 17

Redress Mechanisms for Consumer Complaints 17

Internal Complaint Units/Sections of Banks 17

Banking Ombudsman 17

Jurisdiction 18

Consumer Protection Department 18

Banking Courts for Recovery of Loans 18

Judges of Baking Courts 19

Powers of Banking Courts 19

Procedure of Banking Courts 19

Growth of Consumer Financing in Pakistan 20

Consumer Finance–Myths and Facts 24

Major Issues and Challenges 25

Issues and Challenges from a Consumer Perspective 30

High Interest Rate Spread 31

Variable Interest Rate 33

Increasing Inflationary Impact 33

Deteriorating Quality of Services 34

Unsolicited Financing 34

Lack of Consumer Education 35

Poor Information Disclosure Practices 35

Loosing Competitiveness in International Trade 35

Intimidating Recovery Practices 36

Weaknesses in Regulatory Framework 37

ATM and Credit Cards 38

ATM and Credit Card Consumption Patterns 38

Reasons for Choice of Bank for Credit Card 38

Credit Card Charges &...