The SBP has introduced Basic Banking Account (BBA), requiring commercial banks to provide basic banking facilities to the low income people. PHOTO: FILE
The financial sector remains restricted in its outreach as a majority of the population is either excluded or informally served and this necessitates the need for building an inclusive and stable financial system in the country, says State Bank of Pakistan Deputy Governor Kazi Abdul Muktadir.
Delivering his address on the topic of ‘Financial inclusion, consumer awareness and protection’ at the 4th Conference on Financial Services and Consumers here on Friday, Muktadir said this limited access was reflected in the total number of bank accounts at around 32 million and the total number of borrowers at only 5.7 million.
He attributed the high level of financial exclusion to two major factors – lack of appropriate product offering by financial service providers and lack of public awareness of financial services and products.
He advised consumer associations, trade bodies, the banking ombudsman, financial and legal functionaries, banks and the Competition Commission to join hands in eradicating consumer malpractices for building an inclusive and stable financial sector in Pakistan.
Muktadir said the SBP was aware of the high financial exclusion and would tackle associated challenges in a sustainable manner. In this connection, he outlined a multi-pronged financial inclusion strategy of the central bank.
The SBP has introduced Basic Banking Account (BBA), requiring commercial banks to provide basic banking facilities to the low income people. A BBA can be opened with a minimum deposit of Rs1,000 with no fee, no minimum balance limit and full ATM facility.
It has also launched an annual branch licensing policy, which requires commercial banks with 100 branches or more to open at least 20% of branches outside big cities and set up branches in tehsil headquarters where no branch of any bank exists.
It has put in place a regulatory framework to promote commercial microfinance and branchless banking in the country. Apart from these, the central bank has also formulated a national microfinance strategy.
The SBP, with the assistance of the UK Department for International Development (DFID) and other donors, launched programmes to increase access to finance, he said, adding the DFID-funded financial inclusion programme aimed to address financial exclusion through a variety of interventions.
FIP interventions largely focus on addressing market failures and industry bottlenecks, while ensuring fair treatment of clients and consumer protection.
FIP was supporting the establishment of a separate national-level Credit Information Bureau for microfinance clients, he said, adding FIP was also supporting Pakistan Microfinance Network (PMN) to introduce a transparent pricing initiative.
Published in The Express Tribune, February 2nd, 2013.
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