Business Recorder Editorials 4th September 2026

Nepal's glacial collapse: Melting into disaster

Climate change is no longer a distant environmental argument about temperatures several decades into the future

EDITORIAL: The catastrophe along the Nepal-Tibet border has already moved far beyond the scale of an isolated Himalayan emergency. By Sunday, nearly 800 people had been confirmed dead, and more than 3,000 remained missing after a massive glacier collapse sent ice, rock, mud and water crashing through valleys and settlements on both sides of the border.

More than 90,000 people have been affected, infrastructure has been destroyed, and rescuers are still struggling to reach communities cut off by debris and fresh flood risks.

The exact chain of events is still being studied, and scientists are rightly cautious about attributing a single disaster solely to climate change. Satellite analysis indicates that part of a glacier collapsed from high altitude, generating an ice-rock avalanche and a massive debris flow. Yet the broader climate context is impossible to ignore.

Scientists have repeatedly warned that rising temperatures are accelerating glacier retreat, destabilising mountain permafrost and increasing the risk of landslides, avalanches and catastrophic flooding across the Hindu Kush-Himalayan region.

That should be the real lesson from Nepal and Tibet.

Climate change is no longer a distant environmental argument about temperatures several decades into the future. Its consequences are already being measured in destroyed homes, damaged infrastructure, lost livelihoods and body counts.

The Himalayan region is warming at roughly twice the global average, while glaciers there are retreating rapidly. As ice disappears and frozen mountain slopes become less stable, entire downstream populations face risks that existing disaster-management systems were never designed to handle.

Pakistan has a particular reason to pay attention. The country contributes less than one percent of global greenhouse-gas emissions, yet remains among those most vulnerable to extreme weather and climate change. Its geography leaves it exposed to multiple hazards at once: melting glaciers in the north, extreme heat, erratic monsoons, floods, drought and growing pressure on water resources.

The devastating floods of recent years have already demonstrated how quickly abnormal weather can overwhelm infrastructure, agriculture and public finances.

The injustice in this equation is obvious, but vulnerability cannot become an excuse for helplessness. Pakistan must continue pressing major emitters for faster emissions reductions, climate finance and meaningful support for adaptation and loss and damage. At the same time, it must strengthen its own capacity to survive what is already coming.

Glacier monitoring, early-warning systems, flood-risk mapping, resilient infrastructure and better coordination between meteorological, disaster-management and local authorities can no longer be treated as secondary development priorities.

The Nepal disaster also underlines the importance of cross-border data sharing. Nepal had reportedly sought stronger cooperation with China on glacier movements and water levels months before the catastrophe.

Although experts do not regard the absence of such information as the principal cause of the disaster, the episode shows why countries sharing mountain systems and river basins need formal mechanisms for exchanging real-time hazard data.

Pakistan faces the same imperative across a region where rivers, glaciers and weather systems pay little attention to political borders.

The immediate priority must, of course, remain rescue, relief and support for the thousands displaced in Nepal and Tibet. But the wider warning should not be lost once the headlines move on. Disasters of this kind are becoming part of the climate reality confronting vulnerable mountain regions.

The world has spent decades debating when climate change would become an emergency. In the Himalayas, that debate has already been overtaken by events.

The banking sector’s next test

EDITORIAL: The SBP governor’s recent call for banks to re-orient their business models towards stronger retail deposit mobilisation and greater private sector financing deserves serious attention.

Addressing the Pakistan Banking Awards ceremony last week, he rightly noted that although the economy has reached the much-needed state of stabilisation, this alone is insufficient to put it on a path of high, sustainable growth, and the banking sector must play a much larger role in financing it.

Pakistan’s banks have certainly become large and profitable institutions. Their assets reached Rs69 trillion and deposits Rs43 trillion by the end of June 2026. Yet, as the governor noted, these figures remain modest relative to the economy’s size compared with other emerging markets. This points to a relatively shallow financial system, with substantial room to bring more household and business savings into the formal banking system.

The high currency-to-deposit ratio reinforces the same concern: too much money remains outside the banking system, limiting the pool of funds available for productive investment. The same weakness is evident on the lending side. World Bank data show that domestic credit to the private sector by banks stood at just 10.7 percent of GDP in 2025, a level far below that of regional peers. In 2024, for instance, the corresponding ratio was around 40 percent in India and 35.8 percent in Bangladesh.

One obvious reason for Pakistan’s unusually low private sector lending is the government’s enormous appetite for domestic financing. Government securities offer banks a relatively safe, liquid, and convenient asset, while lending to businesses requires assessing creditworthiness, monitoring borrowers and accepting default risk.

This, then, is a rational business decision from an individual bank’s perspective, but a problematic equilibrium for the economy. When the government becomes the dominant customer, banks have less incentive to invest in the infrastructure, skills and risk assessment capabilities needed to find and finance productive private borrowers.

Yet government borrowing alone cannot be an excuse. As the governor noted, other economies with substantial public sector borrowing have managed to maintain far deeper private credit markets. India, for instance, has general government debt of over 80 percent of GDP, compared with around 70 percent in Pakistan, yet its banking system continues to channel substantial credit to the private sector.

So, while high government borrowing is undoubtedly an important factor, it cannot alone explain Pakistan’s shallow private credit market. Banks’ capacity and incentive to serve the wider economy, their business models and risk appetites, must also be part of the explanation.

Clearly, banks need stronger credit appraisal systems, digital lending infrastructure, better borrower information, and greater appetite for lending to SMEs and underserved segments. They also need a commercial incentive to compete for deposits rather than simply recycling a limited deposit base into government securities.

Retail deposit mobilisation is particularly important. The government has a role to play here. It must gradually reduce its reliance on bank financing, deepen non-bank sources of public borrowing and create a business environment in which banks can lend confidently to productive enterprises.

Pakistan cannot expect banks to diversify if the sovereign remains their most attractive borrower, nor can banks wait for public borrowing to disappear. If the country is serious about moving from stabilisation to sustainable growth, the government must leave greater room for private credit, while banks must become more willing and better equipped to fill it.

Greater private sector financing is essential because credit converts savings into investment. Without adequate credit, investment remains constrained, leaving economic growth disproportionately dependent on government spending, consumption and external financing.

If Pakistan is to translate stabilisation into higher, more sustainable growth, its banks must become a more effective conduit between the country’s savings and its productive capacity.