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Dar launches strategy to achieve universal financial inclusion


Source : Daily Times    Date : 23-05-2015   

Dar launches strategy to achieve universal financial inclusion
Dar launches strategy to achieve universal financial inclusion

KARACHI: Finance Minister Ishaq Dar on Friday launched National Financial Inclusion Strategy (NFIS) in Islamabad with the objective to gain momentum to achieve universal financial inclusion in a sustained manner.

Sharing the vision, Dar said, “The government is striving to create more opportunities of doing business and make the common people of Pakistan self reliant and economically empowered.”

In this regard, the government is working at various levels to improve governance and availability of energy and other key infrastructure inputs, he added said.

He highlighted that the recent historic agreement for creation of Pakistan-China Economic Corridor is an economically vital plan devised to help drive Pakistan’s economic growth. The economic corridor will connect economic agents and link economic centres with large resources, which can be cultivated for job creation.

Emphasising the need for increasing access to fair and dignified financial services to achieve sustainable economic growth, the minister said that the NFIS, championed by the State Bank of Pakistan, is consistent with the government’s vision 2025, which calls for enhancing access to credit for SMEs and focuses on strengthening and deepening of financial inclusion in the country.

He regretted media speculations regarding imposition of tax on remittances in forthcoming federal budget and categorically said that no such proposal was under consideration.

He pointed out that the government is working on some of the drivers that the NFIS identifies to catalyse financial inclusion. In particular, digitisation of payments is a priority area and resolute efforts have been taken to support the digitalisation of payments and give depth to financial services among various segments of the population. He said Pakistan has become a member of the Better than Cash Alliance - a global initiative. The contribution of branchless banking is significant when it comes to channelising the government-to-person payments.

The minister urged the stakeholders to show their commitment and active engagement to increase access and quality of financial services for the underserved segments of the economy.

Speaking on the occasion, SBP Governor Ashraf MahmoodWathra said that since the early 1990s, Pakistan’s financial sector has witnessed considerable reforms that have significantly strengthened its soundness, profitability, efficiency and diversity. Also, Pakistan has been a pioneer in championing financial inclusion for over a decade and achieved a large number of significant milestones. In particular, the creation of a regulatory framework for Microfinance Banks in 2001; the expansion and modernisation of online credit information bureau (e-CIB) in 2005; the adoption of Branchless Banking Regulations allowing a tiered approach to know-your-customer (KYC) requirements in 2008; the launch of Financial Inclusion Program under DFID support which includes risk sharing initiatives, smart grant facilities for capacity development, innovation and market infrastructure development in 2008; the establishment of a specialised micro-finance credit information bureau (m-CIB) in 2009; and the launch of a nationwide Financial Literacy Program in 2012.

He pointed out that despite the sustained efforts, the level of financial inclusion remains very low and there are a number of reasons for the low level of financial inclusion. He shared that the persistence of financial exclusion in the face of long-standing efforts to promote inclusion pointed the need for a comprehensive National Financial Inclusion Strategy.

The strategy has thus created the needed platform for SBP, the government and private sector to adopt and implement a comprehensive set of coherent and sequential reforms needed to influence financial inclusion in a big way.

He said further that globally, there is an increasing trend towards adoption of financial inclusion strategies with explicit financial inclusion targets at country level. Empirical evidence suggests that, having a NFIS could double the pace of progress on financial inclusion targets. The NFIS will guide efforts to promote financial inclusion over the coming five years. It includes targets and objectives that will be monitored, but it will serve as a living document that can be adjusted as required.

SBP Deputy Governor Saeed Ahmad said that about 50% of the entire population is completely financially excluded with no access to financial services such as formal savings, payments, deposits, and credit; therefore, the financial inclusion is a priority area for the government and SBP. He also shared various initiatives taken by government and SBP to promote financial inclusion in Pakistan. He hoped that the country would achieve its targets for a financially inclusive Pakistan.

He said that to advance financial inclusion, over 50 countries have set national commitments and tangible targets for financial access. Pakistan has now also developed national financial inclusion strategy, which lays sound foundations for financial inclusion for the next 5 years. It identifies the gaps leading to persistent financial exclusion and sets out the national vision and roadmap to accelerate financial inclusion. NFIS also identifies high-impact areas, assigns responsibilities, and provides targets and objectives that will be monitored. He hoped that with successful implementation, the country would achieve its targets for a financially inclusive Pakistan.

The ceremony was attended by local and international dignitaries including members of NFIS council, Presidents of banks, government officials, representatives of donor agencies, and large number of private sector representatives.