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Car Financing, its Significance and Impact on Automobile Industry and Some Trace of Impact on Economy

Bhatti, Nadeem (2005): Car Financing, its Significance and Impact on Automobile Industry and Some Trace of Impact on Economy.

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The entrance of new players in the car market not only created an atmosphere of competition but also equally benefited the borrowers. As a result financing of auto products substantially increased the demand for personal and commercial use of vehicles in the country. Local auto manufacturing plants not only achieved their optimum capacity but also made various expansions and replacements to meet the growing demand of the industry. Another factor that further added to this trend was lowering of interest rate by government by 2004 which further increased direct and indirect flow of the market towards auto products in the country. Auto sector in Pakistan has market tremendous growth during the past few years and this growth is a legitimacy of aggressive public demand for auto products in the country. Presently auto financing has become a regular feature for almost every financial institution, besides their other conventional arms. These banks/NBFIs are playing vital role by providing financial facilities for the purchase of personal and commercial use assets of their borrowers. More realistically, if it is said that financial institutions revived this sick industry, it will not be wrong.

Banking industry is one of the most sensitive businesses all over the world. Banks play very important role in the economy of the country is no exception. Banks are custodians to the assets of the general masses. The banking sector influences and facilitates many different but integrated economic activities like mobilization of resources, poverty elimination, collection and distribution of public information.

The era of nineties was the climax of privatization, deregulation and restructuring in the domestic banking industry and financial institutions. The Muslim Commercial Bank was the first bank to privatized, followed by the Allied Bank Limited, the United Bank Limited and now the Habib bank Limited. One thing good for that particular period was the recruitment of fresh officers in the domestic banking industry through well though out policies of the banking council.

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