SBP prepares for digital shift

Considering permitting digital account opening at banks


Salman Siddiqui December 22, 2020
Speakers were of the view that voices of women needed to be ensured and strengthened at key business forums. PHOTO: REUTERS

KARACHI:

Pakistan’s central bank is considering allowing people to open accounts at banks without physically visiting branches - through digital means like internet and mobile banking - and without compromising customers’ due diligence.

“Digital account opening…is the way forward,” State Bank of Pakistan (SBP) Governor Dr Reza Baqir said while hosting a webinar titled “Launch of Consultation on Banking on Equality Policy: Reducing the Gender Gap in Financial Inclusion” on Monday.

Pakistan has recently allowed overseas Pakistanis to open bank accounts without physically visiting branches and embassies in their host countries.

“We have a plan to introduce this facility domestically and to allow digital onboarding,” he added.

Baqir said housewives lodged complaints of facing difficulties in opening accounts at banks as bankers asked them their source of income or their husband’s source of income.

The digital account opening would address the issue and “materially help with the account opening of housewives and more generally allow lending and credit to reach women as well,” he added.

He asked banks to produce quality data on gender banking. It would allow the central bank to formulate better policies for all, including women.

The SBP governor said women were offered concessional financing through the central bank. “The concessional financing offers women to get loans of up to Rs5 million at 5% interest rate. There is 60% risk coverage being provided to banks. This means the traditional issues of (submitting) collateral (for loan acquisition) can be considerably overcome.”

However, many women do not know about the scheme despite the information being publicly available.

“As of now, only 810 women in Pakistan have availed the facility and only Rs613 million has been disbursed so far,” he said and added that women may contact the central bank in case they faced difficulties in taking benefit of the scheme despite providing all the required documents to the banks.

SBP Deputy Governor Sima Kamil said the central bank had set a quota of 25% to lend money to women under the Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme (YES).

However, this has reached 13% due to low participation of women in the scheme.

“We have refinanced credit schemes for women entrepreneurs. It now sees increasing interest, but now needs to reach a higher level,” she said.

 

“If women are excluded, we do suffer at the macroeconomic level,” she said while citing a research report. “Women are the largest untapped market. That is a significant business case and not CSR,” she said.

Elaborating on the five pillars of the SBP for consultation on banking on equality policy, she said the central bank would make efforts to increase women workforce up to 20% in the banking sector over the next three years or by 2023.

“The State Bank has started conversation with banks in this regard,” she revealed.

She said the gender gap in financial inclusion was on the rise. “Only 11.7 million or 18% of the adult women have active bank accounts compared to 51% for men.”

She urged banks to design women-specific products keeping their need in mind like wedding and savings schemes.

“Women should be received properly and respectfully at points of sales like restaurants,” she added. Pakistan has one of the highest levels of women financial exclusion and the gender gap in inclusion.

“Women’s formal financial account ownership increased from 5% in 2014 to 7% in 2017.”

She noted that female account ownership in the Middle East, South and East Asian countries was much higher than in Pakistan. It is 58% in Saudi Arabia, 92% in Iran, 54% in Turkey, 73% in Sri Lanka, 36% in Bangladesh, 41% in Nepal and 82% in Malaysia.

Aga Khan Development Network (AKDN) Director Princess Zahra Aga Khan stressed the need for providing formal education to girls and women in Pakistan.

“Education is the key to everything, including female’s access to banking services and financial inclusion.”

She agreed with moderator of the webinar, Bill and Melinda Gates Foundation President of Gender Equality Anita Zaidi, that women could be empowered financially through community empowerment. International Monetary Fund (IMF) Policy and Review Department

Director of Strategy Ceyla Pazarbasioglu said women participation in financial inclusion was not great. “Fintechs may help reduce gender gap and inequality in banking services and financial inclusion.”

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