State Bank to launch £10m financial innovation challenge fund
Nationwide financial literacy programme to be started: SBP deputy governor.
KARACHI:
The State Bank of Pakistan (SBP) has announced it will launch a financial innovation challenge fund worth 10 million pound sterling soon.
Speaking at the inaugural ceremony of the National Rural Support Programme’s (NRSP) Microfinance Bank Limited in Bahawalpur on Saturday, SBP Deputy Governor Yaseen Anwar said the fund would spur innovations in financial services products and delivery channels in the country, according to a press release.
Stressing the need for creating better awareness among people regarding availability and use of financial services, the SBP official announced, “A nationwide financial literacy programme will be launched shortly in various districts on a pilot basis.”
The central bank has already launched the Improving Access to Financial Services Fund (IAFSF), which is aimed at existing and potential users of microfinance services. The fund is charged with enhancing their capability to access credit and put it to productive use.
“SBP believes that in the long run institutional development is the most critical factor for a sustainable growth of microfinance in the country,” said Anwar, adding the central bank will continue to work towards assisting microfinance providers to enter the fold of mainstream financial institutions. However, the deputy governor acknowledged that this process will be time-consuming and rigorous, as institutions will have to improve competitiveness and meet regulatory criteria.
Anwar expressed hope that the addition of a bank to NRSP will increase the scope of services beyond microcredit to include deposits and remittances in rural areas. “I believe that NRSP experience will act as a change agent that will facilitate the transformation of other larger microfinance institutions (MFIs) into the formal banking system,” he added.
He also highlighted that the central bank has collaborated with the Pakistan Microfinance Network (PMN) to launch a pilot Credit Information Bureau (CIB). The bureau allows micro lenders to check credit histories of applicants and outstanding loans against them from other institutions.
The State Bank is also operating the Microfinance Credit Guarantee Facility, which has helped the microfinance sector secure capital from conventional banks, so they may in turn lend to their clientele.
Stressing the need for innovation and flexibility in the microfinance sector, Anwar said, “So far, grants of Rs400 million have been approved for eight microfinance providers in respect of 10 major projects, which are aimed at addressing institutional strengthening needs of key players.”
“The bricks and mortar approach to promoting financial inclusion is not very useful,” he added. He also called on financial institutions, especially those operating in or expanding to rural areas, to maximise the use of branchless banking system and agents to improve outreach.
Published in The Express Tribune, March 13th, 2011.
The State Bank of Pakistan (SBP) has announced it will launch a financial innovation challenge fund worth 10 million pound sterling soon.
Speaking at the inaugural ceremony of the National Rural Support Programme’s (NRSP) Microfinance Bank Limited in Bahawalpur on Saturday, SBP Deputy Governor Yaseen Anwar said the fund would spur innovations in financial services products and delivery channels in the country, according to a press release.
Stressing the need for creating better awareness among people regarding availability and use of financial services, the SBP official announced, “A nationwide financial literacy programme will be launched shortly in various districts on a pilot basis.”
The central bank has already launched the Improving Access to Financial Services Fund (IAFSF), which is aimed at existing and potential users of microfinance services. The fund is charged with enhancing their capability to access credit and put it to productive use.
“SBP believes that in the long run institutional development is the most critical factor for a sustainable growth of microfinance in the country,” said Anwar, adding the central bank will continue to work towards assisting microfinance providers to enter the fold of mainstream financial institutions. However, the deputy governor acknowledged that this process will be time-consuming and rigorous, as institutions will have to improve competitiveness and meet regulatory criteria.
Anwar expressed hope that the addition of a bank to NRSP will increase the scope of services beyond microcredit to include deposits and remittances in rural areas. “I believe that NRSP experience will act as a change agent that will facilitate the transformation of other larger microfinance institutions (MFIs) into the formal banking system,” he added.
He also highlighted that the central bank has collaborated with the Pakistan Microfinance Network (PMN) to launch a pilot Credit Information Bureau (CIB). The bureau allows micro lenders to check credit histories of applicants and outstanding loans against them from other institutions.
The State Bank is also operating the Microfinance Credit Guarantee Facility, which has helped the microfinance sector secure capital from conventional banks, so they may in turn lend to their clientele.
Stressing the need for innovation and flexibility in the microfinance sector, Anwar said, “So far, grants of Rs400 million have been approved for eight microfinance providers in respect of 10 major projects, which are aimed at addressing institutional strengthening needs of key players.”
“The bricks and mortar approach to promoting financial inclusion is not very useful,” he added. He also called on financial institutions, especially those operating in or expanding to rural areas, to maximise the use of branchless banking system and agents to improve outreach.
Published in The Express Tribune, March 13th, 2011.