Con­sumer Pro­tec­tion

Enterprise - - Contents - By Kazi Ab­dul Muk­tadir, Deputy Gov­er­nor, SBP

Fi­nan­cial Ser­vices and Con­sumers

The im­por­tance of fi­nan­cial ser­vices in the de­vel­op­ment of any econ­omy can­not be overem­pha­sized as it pro­motes en­trepreneur­ship, gen­er­ates em­ploy­ment, fosters in­no­va­tion, re­duces poverty lev­els and en­hances so­cial equal­ity.

There­fore, SBP, as part of its fi­nan­cial sec­tor de­vel­op­ment strat­egy is ac­tively pro­mot­ing fi­nan­cial in­clu­sion. Fi­nan­cial In­clu­sion refers to the process of pro­mot­ing af­ford­able, timely and ad­e­quate ac­cess to a wide range of reg­u­lated fi­nan­cial prod­ucts and ser­vices and broad­en­ing their use by all seg­ments of so­ci­ety through the im­ple­men­ta­tion of tai­lored and in­no­va­tive ap­proaches in­clud­ing fi­nan­cial aware­ness and ed­u­ca­tion with a view to pro­mote fi­nan­cial well­be­ing as well as eco­nomic and so­cial in­clu­sion.

To add fur­ther em­pha­sis and ur­gency to the is­sue of fi­nan­cial in­clu­sion, I would like to share that fi­nan­cial sec­tor in Pak­istan re­mains re­stricted in its out­reach as the majority of pop­u­la­tion re­mains ei­ther ex­cluded or in­for­mally served. This limited ac­cess is re­flected in the to­tal num­ber of bank ac­counts, presently around 32 mil­lion, and the to­tal num­ber of bor­row­ers, which is only 5.7 mil­lion. This high level of fi­nan­cial ex­clu­sion is largely at­trib­uted to two ma­jor fac­tors. Firstly, on the sup­ply side, there is lack of ap­pro­pri­ate prod­uct of­fer­ing by fi­nan­cial ser­vice providers pri­mar­ily in­flu­enced by their typ­i­cal hes­i­tance to­wards the in­for­mal and low in­come seg­ments of the pop­u­la­tion and lack of ge­o­graphic pres­ence.

Se­condly, on the de­mand side, there is lack of pub­lic aware­ness about avail­abil­ity of fi­nan­cial ser­vices and prod­ucts.

SBP is cog­nizant of high fi­nan­cial ex­clu­sion in the coun­try and is fully com­mit­ted to tack­ling the as­so­ci­ated chal­lenges in a sus­tain­able man­ner. State Bank of Pak­istan is pur­su­ing a multi-pronged fi­nan­cial in­clu­sion strat­egy through the fol­low­ing:

1. SBP in­tro­duced Ba­sic Bank­ing Ac­count (BBA), re­quir­ing com­mer­cial banks op­er­at­ing in Pak­istan to of­fer BBA to fa­cil­i­tate and pro­vide ba­sic bank­ing fa­cil­i­ties to the low in­come peo­ple in Pak­istan. A typ­i­cal BBA can be opened with a min­i­mum de­posit of Rs1,000 car­ry­ing no fee, no limit of min­i­mum bal­ance and of­fer­ing full ATM fa­cil­ity.

2. SBP has in­tro­duced the An­nual Branch Li­cens­ing Pol­icy which re­quires com­mer­cial banks with 100 branches or more to open at least 20% of their branches out­side big ci­ties and set up branches in Tehsil Head­quar­ters where no branch of any bank ex­ists.

3. SBP has de­vel­oped a world class reg­u­la­tory frame­work to en­able com­mer­cial mi­cro­fi­nance and branch­less bank­ing in Pak­istan. Th­ese reg­u­la­tions en­able al­ter­na­tive ap­proaches and mod­els for de­liv­ery of propoor and low-in­come fi­nan­cial ser­vices and prod­ucts while en­sur­ing in­sti­tu­tional vi­a­bil­ity, broad­en­ing ac­cess, fi­nan­cial in­tegrity, and pro­con­sumer prac­tices. 4. Pak­istan is amongst the few coun­tries that have a na­tional mi­cro­fi­nance strat­egy which not only iden­ti­fies driv­ers and bot­tle­necks to growth but also pro­vides an im­ple­men­ta­tion plan drawn along side with in­dus­try stake­hold­ers to mon­i­tor progress against the iden­ti­fied tar­gets.

5. SBP has part­nered with the UK Depart­ment for In­ter­na­tional De­vel­op­ment (DFID) and other donors to launch pro­grams to in­crease ac­cess to fi­nance in the coun­try. The DFID-funded Fi­nan­cial In­clu­sion Pro­gram (FIP) aims to ad­dress fi­nan­cial ex­clu­sion through a va­ri­ety of in­ter­ven­tions. FIP fo­cuses on mar­ket­based, sus­tain­able fi­nan­cial ser­vices for low in­come peo­ple and small en­ter­prises. In ad­di­tion, FIP aims to en­hance de­liv­ery of fi­nan­cial ser­vices through tech­nol­ogy based branch­less bank­ing so­lu­tions, fi­nan­cial in­no­va­tion, and re­mit­tances. FIP has pro­vided support to a num­ber of ini­tia­tives to en­hance sup­ply of and ac­cess to

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