Pakistan's regulations are built to punish, not to enable

What a chief risk officer actually does

The episode opens with Muzamil welcoming Ammar Habib Khan, the chief risk officer at Karandaaz Pakistan, and asking him to define the job in his own terms. Ammar’s framing is broader than the title suggests. Risk, he says, is in everything. “We’re sitting here right now, an earthquake could happen and it’d all be over. That’s a risk.” The discipline, in his telling, is the work of identifying the non-zero probability of something going wrong, then deciding how to avoid it, mitigate it, or live with it.

He is blunt about how Pakistanis tend to handle this in practice. “Ideal risk management in Pakistan is basically Ayat-ul-Kursi,” he says. People do not insure their cars even after theft. The foundations of the house are an afterthought. The professional discipline he practices is, at its core, an attempt to take that gap seriously.

Ammar traces his own path through it: IBA Karachi for a bachelor’s in finance, a stint at HSBC covering risk management and serving as the country economist for Pakistan, then a master’s in economics from Barcelona. He chose economics over an MBA because he did not want to relearn the same material, and Barcelona because the weather sits between twenty-two and twenty-four degrees year round. He notes, with some sadness, that the city is full of Pakistanis from one specific district — Gujrat — and that despite free state education, the children of that diaspora generally do not study.

Why HSBC and the global banks pulled out

The conversation moves quickly into a piece of recent banking history that Ammar lived through. HSBC has been shrinking its footprint not only in Pakistan but globally, and he attributes it to two compounding forces.

The first is competitive. After the financial crisis, the bank’s leadership concluded that in markets where four or five large local banks dominate, an international franchise simply could not compete. The second is regulatory. FATF, anti-money-laundering rules, and counter-terror-financing requirements pushed compliance costs to a level where operating in a market designated as risky was no longer worth the reputational and penalty exposure. He cites HSBC’s Mexico drug-money fine, Deutsche Bank’s penalties, and HBL’s roughly one-hundred-fifty to two-hundred-million-dollar fine in New York over flagged Saudi-bank transactions. “After that, HBL shut down its US operations. Banks do that.” The result, over the past decade, is that local banks have absorbed the space international banks left behind.

The taxpayer passport that cannot exist

Muzamil raises a personal frustration: the difficulty of getting visas as a Pakistani, even when invited by a foreign ministry, and the suggestion he has heard floated of a “taxpayer’s passport” — a tier above the standard document for filers. Ammar engages with the idea seriously and then dismantles it.

The mechanics, he says, are straightforward. A tax number could in principle serve as a credential — anyone above a certain threshold of paid tax could be treated as a verified, low-risk traveller. But the foreign side would never accept it. “That would be discriminatory. How would that country justify accepting only a certain kind of Pakistani? They simply wouldn’t.” The instinct, he agrees, is right. The instrument is wrong.

He extends the diagnosis. The friction Pakistanis face at embassies — the buses, the security cordons, the humiliating queues — was justified in a particular era and has never been dialled back. “Once a wall goes up in this country, it doesn’t come down.” He points to the State Bank as another example of the same pattern: rules accrete, never recede.

The Thar coal years and the real cost of electricity

Ammar’s post-Barcelona return to Pakistan landed him in financial modelling for the Thar coal complex around 2014 and 2015 — the early CPEC years. His job was to determine the unit cost of coal coming out of the ground and the price at which it could be sold to a power plant. The coal is being extracted today, he confirms, though its quality is poor.

Muzamil pushes him on the renewable-versus-coal comparison and Ammar reframes the question. Renewables, he argues, cannot be the only thing in an energy mix because they do not provide base-load power. Fossil fuels do. Nuclear, in his ranking, is the cleanest and most efficient base-load source, followed by solar and wind in the mix.

The sharper point comes when he breaks down a Pakistani electricity bill. Roughly six rupees per unit is the actual generation cost, all-in, on a twenty-year basis. By the time the consumer sees the bill it is closer to twenty-five. Of the gap, three to four rupees is capacity payment cost. Most of the rest is transmission inefficiency: of every hundred units pushed into the wire, only eighty arrive at the house. “That twenty-unit gap — someone has to pay for it. You and I are paying for it. That is the inefficiency no one talks about.” His arithmetic is direct: of twenty-five rupees, fifteen are recoverable immediately if anyone chose to do the work. The conversation in public stays stuck on capacity payments alone.

What Karandaaz is actually trying to do

Muzamil asks Ammar to explain Karandaaz, which he says he sees the name of everywhere. Ammar describes it as a grant-funded entity, financed by the UK’s FCDO and the Bill and Melinda Gates Foundation, with a single ultimate objective: financial inclusion as a route to poverty reduction.

The theory of change he articulates is concrete. In rural Pakistan, women often do not have phones in their own name, let alone bank accounts. If a woman receives her income in cash, deductions and lost agency follow. If she receives it into a bank account she controls, the financial decision belongs to her. Aggregated across the country, this raises the velocity of money — the speed at which currency changes hands — and shrinks the cash drag that suppresses formal economic activity.

The second mandate Ammar describes is SME lending. He admits he did not appreciate the scale of the problem before joining Karandaaz. SME lending as a share of total credit in Pakistan has been declining for years, and now sits well below comparable economies like India, Bangladesh, Thailand, and Vietnam. The reason, in his telling, is that banks have no incentive to underwrite small businesses when the government borrows from them at eight percent on a risk-free basis. “Why would a bank lend to a small business when the sovereign is paying eight percent risk-free? There is no risk-free in this world, but that’s the perception.” A third programme supports women-owned businesses specifically — the Women Venture Programme — where the obstacles are less about formal regulation and more about a banking culture that still asks for male references on routine applications.

Regulation as obstruction

This is where the central thesis of the conversation surfaces. Muzamil describes opening a brokerage account in twenty minutes and Ammar lights up. He contrasts it with the standard experience and lays out his diagnosis directly: “Regulation is written to facilitate people. Regulation is not written to harass them.” In Pakistan, he argues, the operating mindset has reversed that. The default posture of the regulator and the institution is suspicion of the user.

He widens the lens. India, he points out, has account portability — a citizen can pick up their bank account, with its full data history, and move it to another bank. “You own your data.” Robinhood lets a user start trading stocks in three minutes. Binance lets a user trade crypto in three minutes from anywhere in the world. The regulatory requirements for the underlying compliance work are no different. The gap is mindset.

He returns to the State Bank example. Branches still close on the first of every month for reconciliation. “Forum mein regulator action lena chahiye — yeh kya mazaak hai branch band ho? Your app is also your branch. In fact, your app is the biggest branch — trillions of rupees of business runs through it. And you cannot run it properly.”

Raast, and the pipe that could carry everything

Ammar’s most expansive section in the conversation is on Raast, the State Bank’s instant payment infrastructure. He frames it through an analogy. “Picture a very large pipe. Data flows through it in two directions. Banks connect to the pipe. Fintechs connect to the pipe. A user puts in their CNIC details. Those go straight to NADRA. NADRA confirms the person is verified. Then the user asks for all their linked accounts. The brokerage app, sitting on the pipe, sees that this CNIC is linked to five accounts and pulls them in instantly.”

Two consequences follow. The first is that identity becomes the addressable unit of payment. Sixteen-digit account numbers stop being how people send each other money; an identity card number or an email-equivalent handle does the job. The second is that payments separate from the rest of banking. The same institution no longer needs to be the deposit-taker, the lender, and the payments rail. Payments becomes an open layer that anyone can build on.

He is direct about the prize. “This is the power of Raast if used effectively.” The blocker is not the infrastructure. It is the willingness of incumbent banks to treat their digital surface area as the front door rather than a sideshow.

Why Pakistani fintech keeps shipping the same app

Muzamil raises something he has been circling all episode: a screenshot he saw the previous day mapping roughly three hundred Pakistani fintech companies. Almost all of them, he notes, sell some variant of utility-bill payment. He shares his own frustration with EasyPaisa’s twenty-five-thousand-rupee daily receive limit on an account that should be his primary digital wallet. Why, he asks, has nobody cracked QR adoption the way India has?

Ammar’s answer is structural. Part of it is the limit regime — daily caps that make a mobile wallet usable for a chai run but not a real-world purchase. Part of it is that the consumer faces no penalty for staying in cash. “Cash has zero cost for the consumer. I have a hundred thousand rupees in my pocket. I can walk around with it. What is going to incentivise me to use an app? The app has to do something cash cannot. The one thing it can offer is convenience.”

If the app is not convenient, he argues, the user tries once, tries twice, and abandons it. It has to work one hundred percent of the time. He runs through the contrast: Spotify entered Pakistan and signed him up in two minutes — email address, card number, done. The local music apps that preceded it shipped with no user interface to speak of, no payment adoption, and no design intuition. “Spotify killed them.” His broader claim is that no Pakistani consumer app stands up as something a person would describe as world-class. He challenges Muzamil to name one. Neither of them can.

He ends the section with a point about audience. “The first people who build these apps in Pakistan are people like us. And the apps are built in English — for two percent of the country.” His frustration is that the lowest-income segment is being squeezed for the data and the transaction volume but is not being given a product designed for them. The opportunity is to build for that market properly, not to extract from it.

The two scenarios for 2050

In the closing stretch, Muzamil asks his standard long-arc question. Ammar is thirty-five. Where does he see Pakistan in 2050, when his children are reaping the consequences of the decisions made now? Given that he is a risk officer by training, Muzamil asks for the worst case, the middle case, and the best.

Ammar refuses the middle case. “There is no middle ground.” His worst case is the country continuing on its current trajectory. Income levels, lifestyle, and basic indicators have deteriorated, and another twenty years of three-to-four-percent growth produces a Pakistan that has been overtaken decisively by its peers. He uses Vietnam as the comparison point. “Until 2004, Pakistan and Vietnam had roughly the same income per capita. Today Vietnam is four times Pakistan.” Sixteen years. One sustained growth period of ten to twenty years at five percent or more, he argues, would compound into a completely different country.

The best case he describes is income per capita of fifteen thousand dollars or more, an economy that has moved beyond agriculture into whatever the technology-plus stack of the 2050s turns out to be, and — most importantly — the basics working. Drinkable tap water. Functional public schools. Accessible health care. He frames the order of operations bluntly. “Give people water and food. The rest will figure itself out. Give them school education. Give them health. People will do the rest.” The reason it has not happened is not the land — Pakistan has five rivers and fertile soil — but mechanisation and policy. Pakistani crop yields, he notes, are among the worst in the world, and the problem is operational, not natural.

By the end of the conversation, Muzamil makes the standard ask: if a listener is going to disagree, do it in the comments, not by quietly unfollowing. He tells the audience he would personally like to know what specific steps could push the country toward eight or nine percent growth — a thread he wants to pull on with Ammar in a second conversation.