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REUTERS
January 21, 2011
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Central bank set to soften rules to promote branchless banking

Sports

REUTERS
January 21, 2011

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KARACHI: Pakistan’s central bank is set to soften its regulatory framework to promote branchless banking in the country, Governor Shahid Kardar said on Thursday.
“The central bank is open to ideas and suggestions from the private sector to make this framework more conducive in order to expand the financial outreach in the country,” Karadar said, while speaking at a signing ceremony of a local bank to introduce branchless banking.
State Bank of Pakistan (SBP) announced branchless banking regulations in March, 2008.
Kardar said that this type of banking was the future of the country’s financial sector. It opens up opportunities for banks to tap the un-exploited potential and give access to those who are outside the banking ambit at an affordable cost, he added.
The governor said that Pakistan’s financial sector was experiencing a dynamic transition led by the increasing uptake of branchless banking solutions. “This was the new frontier and the only affordable solution for the financial inclusion.”
The governor stressed upon the commercial banks to come up with new branchless banking products. “It would not only help them improve their market share but also serve a larger portion of the population living in rural and far-flung areas,” he said.
Pakistani banks added 3,000 branches in a span of less than two years. Kardar said the cost of setting up a branch was 76 times higher than using third party agents and it could be reduced further if cell phones are used.
Kardar said that there were 100 million mobile phone users in the country and barely half of the population is literate, but even that segment was adept at using the technology. “Poverty and limitation of imagination are the only constraints.
The cost of information and communication technology is shrinking fast,” the governor added.
Meanwhile, analysts give a cautious welcome to the central bank plan to promote branchless banking in the country, citing

insufficient checks and balances and illiteracy being major hurdles which may result in misuse of the technology.
“It’s an ambitious plan at the moment, but the potential is no doubt huge. It will benefit the people and help the banking industry grow further,” said one analyst.
Mobile banking is gaining popularity in even the developing countries like South Africa and Nigeria. Even in the neighbouring country of India, farmers are being educated through the widespread use of 3G technology.
“Knowledge economy is needed. We need to develop trust, instill awareness and invest on using latest technology for branchless banking,” another analyst said.

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