SBP targets financial inclusion to increase to 75%, reduce gender gap 25% by 2028

KARACHI: Pakistan’s central bank aims to increase financial inclusion in the country to 75 per cent and reduce the gender gap to 25 per cent over the next four years.

On Monday, the State Bank of Pakistan (SBP) launched the third edition of the National Financial Inclusion Strategy (NFIS) for 2024-2028. This initiative is designed to enhance financial inclusion through digitalisation and reduce the gender gap in finance.

Financial inclusion refers to the accessibility of formal financial services for individuals and businesses. It encompasses various services, including payments, savings, credit and investment options, all provided with dignity and fairness. Promoting financial inclusion not only fosters economic growth but also contributes to broader developmental objectives.

Since 2015, the SBP has implemented two prior NFIS, covering the periods from 2015 to 2018 and 2019 to 2023. The goal has been to improve access to and use of formal financial services by the population. As a result, the level of financial inclusion – a measure defined by the proportion of the adult population with a bank account – has increased from 16 per cent in 2015 to 64 per cent in 2023.

In addition to digitalising financial services, the SBP’s Banking on Equality Policy has played a pivotal role in enhancing women’s financial inclusion in the country. As of December 2023, 31 million adult women had at least one bank account, up from 13 million in 2018, leading to a reduction in the gender gap from 47 per cent in 2018 to 34 per cent in 2023. The implementation of the two previous NFIS has utilised new technologies, supportive regulatory frameworks, and increased public-private partnerships to promote financial inclusion. However, expanding the reach of digital financial services to accommodate the underbanked segments of society remains a challenge, largely due to a cultural preference for cash.

With its third NFIS, the SBP aims to build on the progress made in previous strategies, address ongoing obstacles to financial inclusion, and capitalise on further digitalisation to foster innovation. This strategy prioritises improving the availability and usage of secure and user-friendly digital financial services. It also seeks to enhance the financing ecosystem for priority sectors and strengthen the capabilities of both financial institutions and consumers. Special attention will be given to promoting financial inclusion and awareness in underserved areas, especially among vulnerable groups such as women, youth, and individuals with disabilities.

Furthermore, to stimulate inclusive economic growth and development in the country, specific actions have been outlined to reform priority sector financing in areas such as small and medium enterprises (SMEs), housing, agriculture, microfinance and sustainable finance. The ultimate goal is to improve the well-being of low-income and underprivileged populations.

SBP governor affirms commitment to further increase financial inclusion through enhanced collaborations with global and domestic stakeholders

The governor has also reaffirmed the central bank’s dedication to increasing financial inclusion through strengthened collaborations with both global and domestic stakeholders, a statement said on Monday.

Ahmad shared these remarks in a bilateral meeting held with the Chief Executive Officer of the Alliance for Financial Inclusion (AFI), Dr Alfred Hannig, during his visit to Pakistan. Hannig extended AFI’s appreciation for the SBP’s leadership role in promoting financial inclusion in Pakistan and discussed areas of mutual collaboration to continue efforts towards breaking the barriers. The SBP is a founding member of AFI since 2008, which is a policy leadership alliance of central banks and financial regulatory institutions from 84 countries with the common objective of advancing financial inclusion at country, regional and international levels. The SBP currently serves on the AFI Board and as vice chair of the AFI Gender Inclusive Finance Committee and the South Asia Regional Financial Inclusion Initiative (SARFII).

Ahmad appreciated AFI’s support and its longstanding partnership with the SBP, which facilitated peer learning exchanges and capacity-building opportunities for SBP officers in developing and implementing evidence-based financial inclusion policies. In his remarks, Hannig highlighted the crucial and progressive need to enhance regulators’ capacity in the South Asia region to achieve impactful financial inclusion policy objectives and stressed that the implementation should be balanced with effective cyber security resilience and consumer protection.

The meeting also explored opportunities to further strengthen institutional collaboration in areas of digital payments, financial literacy, sustainable finance, and MSME financing. Both parties resolved to continue efforts to improve the financial health and well-being of the masses, especially of unbanked and underbanked population segments.

The SBP also organised a discussion of Hannig with financial inclusion stakeholders, including the presidents and CEOs of banks, representatives of the Pakistan Banks’ Association, Pakistan Microfinance Network, Fintech Association & Network, and the SBP’s senior management.

An interactive discussion followed, where industry participants shared grassroots-level insights and key challenges in broadening access to financial services, while AFI shared its perspective based on global best practices.