The first obvious answer is to enforce laws and rules against the use of bonded labor. The second, often ignored, answer is to enable people to legitimately borrow the money they need from regulated financial institutions like banks. In addition, they can also save and invest money as bank customers. This is called financial inclusion.
The Economist magazine publishes an annual Economic Intelligence Unit (EIU) assessment and ranking of countries for their policies to promote financial inclusion. In 2015, the EIU has ranked Pakistan 5th in the world among 55 countries surveyed for financial inclusion. Peru (90 points) and Colombia (86) remained the top two countries for financial inclusion. The Philippines was followed by India (71) and Pakistan (64), while Chile and Tanzania (62) tied at sixth and Bolivia and Mexico (60) tied at eighth. Ghana (58) rose in the ranks to clinch the 10th place. Finishing at the bottom of the rankings were Haiti, Congo, and Madagascar.
Pakistan had 41.7 million bank accounts last year for its adult population of about 100 million, according to the State Bank of Pakistan (SBP). More than 31.3 million accounts, or 75% of all bank accounts, belonged to the personal accounts category. The SBP has recently modified the regulatory framework to quicken the bank account-opening process with the help of the national database authority, according to Pakistan's Express Tribune newspaper. “NADRA is the real-time online depository of the biometric impressions of close to 100 million people,” Tameer Microfinance Bank CEO Nadeem Hussain said, adding that utilizing its database had so far resulted in eight million one-minute accounts.
According to a new CGAP (Consultative Group to Assist the Poor), accumulated research confirms that financial inclusion, defined as access to and use of formal financial services, benefits the poor people. Some 20 randomized control trials (RCTs) indicate that formal financial services, such as microcredit, savings, insurance and mobile payments, can have a positive impact on a variety of microeconomic indicators, including self-employment business activities, household consumption, and well-being. “But benefits are not limited to the microeconomic level,” notes co-author Robert Cull, Lead Economist, Finance and Private Sector Development Research Group at the World Bank. “In addition to benefits to individuals, non-experimental evidence indicates that broader financial inclusion also coincides with greater local economic activity and decreased economic inequality at the macroeconomic level.”
Inability to have a bank account in modern economy causes financial exclusion of such individuals who happen to be poor. Improving their financial inclusion is essential to make them participants in the nation's economy. The State Bank's efforts to promote financial inclusion are part of Pakistan's war on poverty that needs to continue until all citizens have full access to financial services in the country. The high and growing penetration rate of mobile phones offers the fastest way to do this by offering branchless mobile banking to everyone with a cell phone.
Related Links:
Haq's Musings
Pakistan Economy Near Trillion Dollar Mark
Pakistan 2.0: Technology Driving Productivity
Branchless Mobile Banking Takes Off in Pakistan
Financial Services Sector in Pakistan
Pakistan Ranks High in Microfinance
Pakistan Deploying Mobile Apps to Improve Governance
Pakistan Mobile Broadband Faster Than India's
Pakistan's Media and Telecom Revolution
27 comments:
https://theconversation.com/from-zorro-to-zombie-the-rise-and-fall-of-the-microcredit-movement-51691
The rise and fall of the microcredit movement
Microcredit, which was viewed as a perfect market-affirming solution to poverty in developing countries, has collapsed. In 30 years it's gone from Zorro to Zombie.
https://theconversation.com/how-microfinance-disappointed-the-developing-world-23206
How microfinance disappointed the developing world
https://theconversation.com/why-lending-through-community-based-organisations-makes-sense-50263
Why lending through community-based organisations makes sense
https://theconversation.com/why-financial-inclusion-needs-a-new-frontier-asset-building-49169
Why financial inclusion needs a new frontier – asset building
looking at the top 10 countries, you do not get much comfort.
19640909rk: "looking at the top 10 countries, you do not get much comfort."
These are the countries with significant population of the unbanked. They do need policies to promote financial inclusion.
Good to know, there is a growing interest in Pakistan on Islamic banking, as well as micro financing. E-baking including easypaisa & its different variants are also getting popular in Pakistan. I believe we are on the right track. My major concern is the economic growth rate of Pakistan, our current growth rate in my personal opinion is low though it is considerably higher as compared to the global average but still a lot of works remains to be done.
When do you think will we be able to see the fruits of CPEC?
@19640909rk
I dont agree Chile, Philippines, Mexico, Columbia, India & Pakistan are all major emerging economies. The troubles with Pakistan are of a different sort, may be Mr Riaz can elaborate what exactly is the dilemma with Pakistan`s economy, my guess lack of foreign investment, reason poor international reputation due to negative media coverage, poor law and order situation (though considerably improved in the last year militancy and terrorism at record low levels where as such incidents have increased world wide), will CPEC be a gamechanger I don`t know may Mr Riaz can elaborate.
Lack of Savings and investment!
East Asian (to some extent India) model is this:
High Savings rate
High Capital investment(with a focus on heavy industry)
FDI has NEVER been a significant part of capital investment in the economy.
It works! Pakistan needs to increase savings and curtail consumption and invest in heavy industry and infrastructure like India is doing otherwise be prepared to dance to Modi's tunes.
Anon: "be prepared to dance to Modi's tunes."
It's just another Hindu Nationalist delusion.
Modi himself had to go to Pakistan after his cronies told all of his opponents to go to Pakistan for a year.
#Pakistan ranks among top 10 for #science contribution in #Asia for 1996-2014
http://www.scimagojr.com/countryrank.php?area=0&category=0®ion=Asiatic+Region&year=all&order=it&min=0&min_type=it …
pic.twitter.com/L2FYioicdD
#Pakistan banks’ deposits up 12%, loans up only 7% in 2015
http://www.pakistantoday.com.pk/2016/01/08/business/pakistan-banks-deposits-up-12-advances-up-only-7-in-2015/ …
Total deposit of the scheduled bank has gone up by 12 per cent to Rs 9.3 trillion or 33 per cent of GDP in 2015 against an increase of 11 per cent in 2014 and average growth of 14 per cent during the last 5 years (2010-14).
Umair Naseer, an analyst at Topline Brokerage house attributed this to higher broad money (M2) growth in 2015, which clocked in at 11 per cent against 10 per cent in 2014 and last 5-year average M2 growth of 13 per cent.
The slight improvement in deposits growth bodes well for banking sector as there were concerns of deposit withdrawals following imposition of withholding tax (WHT) on cash withdrawal from bank accounts in 2015.
Government imposed WHT of 0.6 per cent on all banking transaction of over Rs 50,000 in a day for non-filers. Later on, the government reduced the tax rate to 0.3 per cent till January 2015 allowing traders to file tax returns in the given time.
Investments registered strong growth of 32 per cent to Rs 6.7 billion as banks continued to invest in risk-free government securities. Consequently, investment to deposit ratio (IDR) reached an all time high of 72 per cent in 2015.
Advances growth remained lackluster in 2015 increasing by 7 per cent against 9 per cent in 2014, increasing to Rs 4.7 trillion (17% of GDP).
This is also significantly lower than our initial estimate of 12 per cent at the start of the year, the analyst said.
Despite below expectation advances growth in 2015, advances grew owing to strong prospects from the initiation of China-Pakistan Economic Corridor (CPEC).
According to Ministry of Water and Power, out of the total $46 billion, $28 billion projects are to be completed by 2018, which will involve financing of power and infrastructure projects by Chinese and local banks. This coupled with other planned power sector projects is likely to trigger higher advance growth going ahead.
These projects will generate an additional credit demand of $2 billion annually during the next three years, which is equivalent to 5 per cent of the total advances of the industry.
Bankers are also of the view that local component of the financing could be 10-20 per cent of the total planned investment during the next three years. Advances will grow by 10-12 per cent in 2016 and 14 per cent on average during the next three years from 2016-18, the analyst said.
Initially, there were concerns that whether the planned Chinese investment would materialise. However, financial close of some of the projects has already been achieved indicating strong potential for CPEC related funding.
On the consumer side, banks are increasing their lending. However, their part of the total portfolio still remains low. As per SBP, consumer lending in 2015 increased by 10 per cent in line with last year’s figures and its proportion as a percentage of total loans stood at 6 per cent (1% of GDP). Corporate portfolio still dominates the total loan book of banks with total proportion of 67 per cent.
Spreads between the lending and deposit rate remained under pressure during 2015 following 300 basis points cut in interest rates and SBP initiative to curb spreads. Spreads as of November 2015 declined to 5.3 per cent against 6 per cent in Dec 2014. These spreads do not include return from investments, which protected banks from falling interest rates in 2015.
The analyst said that spread may remain flat in 2016 due to anticipation of status quo in interest rates. However, banks margins could come under pressure in 2016 as a major chunk of high-yielding Pakistan Investment Bonds (PIBs) mature in 2016.
Queen Máxima of #Netherland to arrive in #Pakistan tomorrow to promote #financialinclusion
http://tribune.com.pk/story/1042556/queen-maxima-to-arrive-in-pakistan-tomorrow/ …
Queen Máxima of the Netherlands will begin a three-day visit to Pakistan from Tuesday as part of her global efforts to promote financial inclusion.
The queen is the UN secretary-general’s special advocate for inclusive finance for development and her scheduled visit comes in support of Pakistan’s National Financial Inclusion Strategy.
Financial inclusion
During her visit, the queen is set to hold meetings with the president, Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar, together with governor State Bank of Pakistan, according to Radio Pakistan.
On the sidelines of these meetings, the queen is also scheduled to meet with other stakeholders from public and private sectors.
Further, Queen Máxima will hold discussions with the representatives of international organisations, financial organisations, telecom companies and micro-finance institutions to explore their role in improving access to financial services such as savings, payments, credit and insurance.
Davos meetings: Regional peace to map future progress, says PM
Launched in May 2015, the strategy aims to expand the availability of the financial tools the poor need to protect themselves against hardship and improve their lives.
The World Bank is preparing a programme to support the implementation of Pakistan’s financial inclusion strategy over the next five years.
Pakistan has a well-organised financial system but the use of formal services is low, particularly among women, farmers and small businesses.
#Pakistan (9% male, 2% female) Leads South Asia in #MobileMoney. #India (3% m, 1% f), #Bangladesh (3% m, 2% f) http://blogs.worldbank.org/opendata/chart-pakistan-leads-south-asia-mobile-money …
In 2014, an average of 3% of people in South Asia used a mobile phone to send or receive money. While there are still gaps between how often men and women use these services, Pakistan leads the region with 9% of men and 2% of women moving money on their mobiles. You can find more data on financial inclusion in the Global Findex Database
#Pakistan formally launches National Financial Inclusion Strategy. #financialinclusion
http://www.brecorder.com/top-news/pakistan/277936-pakistan-formally-launches-national-financial-inclusion-strategy.html …
Pakistan on Tuesday formally launched its National Financial Inclusion Strategy (NFIS) in the presence of World Bank President Jim Yong Kim.
The United Nations Secretary-General's Special Advocate for Inclusive Finance for Development (UNSGSA), Queen Maxima of the Netherlands and Finance Minister Ishaq Dar was present on the occasion.
Pakistan has developed and launched its National Financial Inclusion Strategy (NFIS) last year and its objective was to enhance formal financial access to 50 percent of the adult population by 2020.
Speaking on the occasion, the World Bank President Jim Yong Kim, said that Pakistan has a great opportunity to become more ambitious in reforming its economy so that more people are lifted out of poverty more quickly and prosperity is more widely shared among its people.
He noted that the government had stabilized the economy over three tough years, Kim said he had discussed in meetings with the prime minister and finance minister about the importance of pressing forward with reforms that would unlock the country's potential.
"Now is the moment for Pakistan to step up to a higher level of growth and opportunity for all its people," said Kim.
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"The National Financial Inclusion Strategy has come at a particularly opportune moment as new technology and the rapid expansion of branchless banking offer unprecedented opportunities to transform financial inclusion in Pakistan.
Pakistan is now leading the way in South Asia when it comes to digital finance and branchless banking", said Kim.
Kim also participated in a panel discussion on "Managing Displaced Populations" and learnt how the country managed a large Afghan refugee population.
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"There is much the world can learn from Pakistan, which has for decades hosted refugees from other countries or had to cope with temporarily displaced people within its own borders," said Kim.
"We are committed to support the Government of Pakistan in repatriating the crisis affected displaced people through the newly effective cash transfer project."
Minister for Finance Ishaq Dar speaking on the occasion said that access to better financial incclusion was key higher economic growth and sustainable economic development.
He added that the government of Prime Minister Nawaz Sharif was committed to develop economy and had initiated National Financial Inclusion Strategy (NFIS) last year.
He said that under the NFIS government was committed to enhance formal financial access to 50 percent of the adult population by year 2020.
He also vowed to reduce poverty by enhancing financial access to 50 percent of the adult population by 2020.
He also underlined the rising growth and declining inflation during the tenure of current government under the leadership of Prime Minister Nawaz Sharif together with significant expansion in coverage of Benazir Income Support Programme (BISP) cash transfers, which would be rising from Rs. 40 billion in 2012-13 to Rs. 105 billion in 2015-16, increasing the coverage from 3.7 million to 5.4 million families and significantly enhanced income support annual stipend from Rs 12000 to Rs 18000 during this period.
Finance Minister also said that government was taking steps for alleviation of poverty through Khushhali Bank and Pakistan Poverty Alleviation Fund (PPAF).
The Finance Minister said, "Government's development policy agenda was based on the principle of inclusive economic growth so that the benefits are shared across all segments of the society".
#Pakistan Has Chance to Boost #Economy, World Bank President Says in #Islamabad. #financialinclusion http://goo.gl/ItqjSx via @WorldBank
Pakistan has a great opportunity to become more ambitious in reforming its economy so that more people are lifted out of poverty more quickly and prosperity is more widely shared among its people, said World Bank Group (WBG) President Jim Yong Kim.
Noting that the government had stabilized the economy over three tough years, Kim said he had discussed in meetings with the prime minister and finance minister about the importance of pressing forward with reforms that would unlock the country’s potential. As part of the World Bank’s continued support to the country, there was discussion of a Development Policy Credit to promote economic reforms.
“Now is the moment for Pakistan to step up to a higher level of growth and opportunity for all its people,” said Kim. “In my meetings with the prime minister and finance minister, we discussed going to a higher level of ambition for reforms for the economy. These could include strengthening the role of the private sector for job creation, accelerating energy reforms, making improvements at the community level for health and education, and ensuring that anti-poverty measures are effective at reaching poor people.”
Kim made his comments on the first day of his two-day visit to Pakistan after meetings in Islamabad with the government leadership, including economic ministers and secretaries from provincial and federal governments.
Kim participated in a State Bank of Pakistan launch event for WBG support to Pakistan’s financial inclusion reform agenda, “Pakistan’s Path towards Universal Financial Access.” “The National Financial Inclusion Strategy has come at a particularly opportune moment as new technology and the rapid expansion of branchless banking offer unprecedented opportunities to transform financial inclusion in Pakistan. Pakistan is now leading the way in South Asia when it comes to digital finance and branchless banking”, said Kim.
The UN Secretary General’s Special Advocate for Inclusive Finance for Development, Queen Máxima of the Netherlands, and Finance Minister Ishaq Dar also participated in the event.
Kim also participated in a panel discussion on “Managing Displaced Populations” and learnt how the country managed a large Afghan refugee population. The event was co-organized by the World Bank, the Economic Affairs Division and UNHCR, in the context of the continuing global refugee crisis.
“There is much the world can learn from Pakistan, which has for decades hosted refugees from other countries or had to cope with temporarily displaced people within its own borders,” said Kim. “We are committed to support the Government of Pakistan in repatriating the crisis affected displaced people through the newly effective cash transfer project.”
Later in the day, he met with the provincial leadership of Khyber Pakhtunkhwa and Punjab and learned about province-level reform efforts and development projects under implementation and preparation with World Bank Group support. He underlined the importance of the role of the provincial governments in the effective implementation of reforms.
Kim later plans to meet private sector representatives, students, and the provincial leadership of Sindh.
The World Bank Group in Pakistan:
The World Bank’s program in Pakistan is governed by its Country Partnership Strategy (CPS) agreed with the government. The World Bank Pakistan portfolio has 26 investment lending projects under implementation with a total net commitment of $4.99 billion. To date, we have committed over $5.6 billion in Pakistan, including $1.2 billion during the 2015 fiscal year. IFC’s advisory services program in Pakistan is one of its largest in the region, with 13 active projects and a funding commitment of over $20 million
Credit Suisse rates #Pakistan banks best performers in Asia. Bad loans just 8.9% http://www.thenews.com.pk/print/96875-Credit-Suisse-rates-Pakistani-banks-best-performers …
Swiss based Credit Suisse has rated Pakistani banks the best performers in Asia over the past three years and second-best in the past five years as the country enjoyed a substantial reduction in the cost of equity since 2013.
In a research-based analysis of Pakistan’s economy and its impact on the banking sector of Pakistan, Credit Suisse praised the pro-business economic policies of the present government earning laurels from global agencies.
It states up-tick in public and private investment, higher domestic consumption in the midst of a low inflationary environment, and better energy availability (from LNG imports) as likely key drivers of accelerating GDP growth in FY16-17 to 4.9-5.3 percent compared to FY9-15, when growth averaged 3.2 percent.
Pakistan's macro recovery is largely on track with substantial improvement in most macro indicators. Fiscal deficit is expected to ease to 4.7 percent of GDP led by a combination of higher tax revenues, contained current expenditures and subsidy pull-back. Forex reserves are close to record highs of $21 billion as of early Jan-2016 equivalent to five months of import bill, driven by windfall gains of lower oil prices and rising remittances. External account stability is also corroborated by a 72 percent decline in the current account deficit over the same period.
Pakistan stands on the verge of an investment-led growth cycle where investment-to-GDP ratio should rise to 15.5 percent in FY16 and 17.0 percent in FY17 from current 13.5 percent. Companies according to researchers are actively pursuing capacity expansions in a broad range of sectors such as auto, consumer, cement and hospital.
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The CPEC, with a price tag of $46 billion spread across energy and infrastructure projects, is becoming more of a reality as compared to a few months ago.
Net FDI from China in the first half of FY16 is up 122 percent YoY and its share in total FDI stands at 64 percent up from 30 percent last year.
With real interest rates still elevated at 3.2 percent, the State Bank of Pakistan (SBP) should not be in a rush to tighten rates as yet, says Credit Suisse. For the past seven years, loan demand had slumped to single digits as gross fixed capital formation stalled, which means real loan growth was negative.
This should pick up going forward as the economy benefits from rate cuts, as well as due to the Chinese investment plans in the country's infrastructure.
Subdued loan growth and mid-teens' deposit growth have resulted in Pakistani banks' loan-deposit ratio falling to 45 percent from 75-80 percent during 2005-09. This will come handy as loan demand picks up, while banks enjoy handsome capital gains on their bond portfolios.
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Substantial deleveraging of the balance sheet has led to asset quality improvements for private sector banks. As a result, NPL ratios declined to 8.9 percent in the third quarter of FY15 from a peak of 12.5 percent in 1Q11. Concerns appear to emerge on the international portfolio, particularly in the Middle East against the backdrop of prolonged weakness in international oil prices. Both UBL (15 percent) and HBL (12 percent) have sizeable credit exposures in the Middle East, which appear to be at risk of deterioration.
Quoting DuPont comparison of Pakistani banks with Asian banks, Credit Suisse pointed out that Pakistani banks have second best net interest margins at 4.54 percent in 2015; lowest loan-deposit ratio at 44 percent in 2015; non-interest income respectable at 1.3 percent of assets, cost-income ratio not bad at 50 percent.
Further, it states NPLs mostly flushed out with aggregate being 11.3 percent for the largest five banks and loan loss coverage healthy at 86 percent; credit costs peaked at 2.3 percent of loans in 2009 and have since fallen to 70 basis point in 2015. Capital ratio is quite comfortable at 12.6 percent (average) for the five banks, it said.
#Pakistan’s financial system remains sound but banks must deal with non-performing #loans: #SBP http://go.shr.lc/296oyp9 via @Shareaholic
The banking sector observed year-on-year growth of 16.8 per cent in CY15 (average growth of 13.2 per cent during CY13-CY15) to reach PKR 14.1 trillion as of end December, 2015. During the same period, advances grew at a modest pace of average 8.1 per cent (average 8.7 per cent during CY13-CY15); while Investments - mostly in government securities - increased by 30 per cent (average 20.1 per cent during CY13-CY15).
The asset expansion has mainly been financed by deposits growth of 12.6 per cent (average 12.5 per cent during CY13-CY15) followed by financial borrowings. Asset quality improved with reduction in infection ratio (11.4 per cent in CY15 compared to 13.3 per cent in CY13) and rise in provision coverage (84.9 per cent in CY15 compared to 77.1 per cent in CY13). However, banks do face challenge in reducing the high stock on non-performing loans.
To this end, SBP is working on various legal and regulatory measures. The operating performance observed considerable improvement as banking sector posted record after tax profit of PKR 199 billion during CY15, largely contributed by growing income share from investment in government papers.
As a result, profitability indicators have improved; return on assets (after tax), increased to 1.5 per cent in CY15 from 1.1 per cent in CY13 and ROE (after tax) increased to 15.6 per cent from 12.4 per cent in CY13. The solvency has also remained robust with high capital adequacy ratio at 17.4 per cent in CY15 (14.9 per cent in CY13). Islamic banking increased its share in overall assets to 11.4 per cent in CY15 (9.6 per cent in CY13) in line with the Strategic Plan for the Islamic Banking Industry 2014-18.
While banks are maintaining high capital levels, expected growth in credit and gradual enhancement in minimum capital requirements prescribed by the regulators require banks to shore up their efforts for further strengthening their capital. Apart from banks, non-bank financial institutions (NBFIs) including development finance institutions (DFIs), leasing companies and mutual funds have performed reasonably well during the Financial Year 2015 (FY15) except for investment finance companies which have continued to post losses.
Insurance sector has posted healthy profits and increase in gross premiums improved the overall penetration rate of the sector to 0.8 per cent in CY15 (0.5 per cent in CY13). Financial markets (Money, FX, and Equity) also performed smoothly during CY15; though, some volatility was seen in equity and FX markets during the second half of CY15 (post Yuan devaluation and anticipated rise in interest rates in the US). FSR also highlighted few challenges facing the financial system.
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Though credit to private sector has improved in recent years, however, prime risk taking activity that is lending, is still at a low level. Consequently, advances to deposit ratio is falling for the last few years. This could be contributed by both demand and supply side factors, particularly challenging economic and business environment due to various structural issues such as power shortages facing the economy.
As such, banks have increased their inclination towards risk free investments in government securities and their balance sheets - loaded with PIBs and MTBs - are more prone to market risk due to interest movements. On the funding side, the deposit growth in past couple of years, although decent, has remained short of meeting asset growth requirements of both the private and public sector.
IRTI, Thomsob Reuters and IBA Study reveals double-digit growth in #Pakistan’s #Islamic finance sector. #Karachi http://en.mehrnews.com/news/119532/Study-reveals-steady-growth-in-Pakistan-s-finance-sector …
A study launched by IRTI, Thomson Reuters and IBA has shown that Pakistan’s Islamic finance sector continues its steady growth.
The study on the Outlook of Islamic Finance in Pakistan said the banking sector is growing and market share in 2018 is expected to rise to 15% percent.
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The Pakistan study ... provides recent developments across the Islamic finance industry and the broader economy and identifies challenges for the country’s future before presenting a number of key development recommendations.
Since its independence in 1947, Pakistan has been striving to develop an economic system based on Islamic principles, the study explains. And in the past 15 years, Pakistan has shifted to a dual Islamic/conventional financial system, which boosts business with the global economy while making progress towards a fully Islamic financial system by building market demand for it. Policymakers and regulators in Pakistan have made positive strides to reform the legal and regulatory framework in the past decade.
The study also highlights the country’s resilient agricultural production, strong potential for hydropower generation, oil production, natural gas reserves, and large gold and copper ore deposits. These resources should also be fully utilized to help accelerate the growth and development of the country, and the Islamic finance industry is a potential partner for structuring and financing such industrial projects.
“Islamic finance is taking strong roots in Pakistan with the support from the government as well as from the State Bank of Pakistan, and the Securities Exchange Commission. Besides the growth in Islamic financial assets, a sustained progress can be observed in regulations, highlighting new frameworks for Shariah governance for Islamic financial institutions, Sukuk and Takaful. The Islamic finance industry is establishing on a robustfooting and we are confident that it has a strong potential for leading the international Islamic finance industry,” said Professor Dr. Mohamed Azmi Omar, Director General of IRTI.
The report highlights that the Islamic capital market sector registered a remarkable growth at a double-digit rate in the past decade, recorded mostly by Islamic mutual funds. Takaful and Mudarabah companies are catching up, despite the relatively small size of these industries. In all Islamic finance industry segments, finance professionals and investors maintain a positive economic outlook, and Islamic finance institutions have built strong fundamentals.
The study also highlights some key trends in the future growth of Islamic finance in Pakistan. These include the rise of branchless Islamic banking via mobile services, the fast growth of the KME Meezan Index (KMI-30) and Islamic All-Share Stock Indices, open market operations on government Sukuk to maintain the liquidity of the Islamic banking system and the rapid expansion of Islamic microfinance.
“To maintain this pace of growth, we recommend that policymakers and professionals continue their reform of regulations and integration with global Shariah and governance standards, the expansion and deepening of an Islamic finance education curriculum, and their marketing effort towards rural areas, to spread awareness and financial inclusion,” said Mustafa Adil, Head of Islamic Finance at Thomson Reuters. “We have no doubt that in the coming decade, we will see Pakistan as key international player for the growth of the global Islamic finance industry”.
To download the full version of Pakistan Islamic Finance Report: Innovation at Asia’s Crossroads, please visit the pages below:
http://islamic-finance.zawya.com/ifg-publications/Pakistan-300816074233A/
http://www.irti.org/Reports/Pakistan.pdf
#Pakistan’s rising #mobile wallet adoption. #financialinclusion #mobilemoney http://www.pakistantoday.com.pk/2016/09/18/business/pakistans-rising-mobile-wallet-adoption/ … via @epakistantoday
Mobile wallets (Such as Telenor EasyPaisa, Mobilink Jazz Cash etc) are often heralded as an innovative source of financial inclusion for the unbanked. And rightly so, mobile wallet accounts bypass the necessity of building and staffing a bank branch, and it also relieves its account holder from making the effort of going to a bank branch. Similarly, at least for Pakistan, its registration requirements makes it an easier option than a regular bank account.
Pakistan’s Financial Inclusion strategy for2015 recognises the importance of mobile money in expanding “digital transactional accounts”, which the strategy recognises as a key driver. In this regard, the recent upsurge in the number of mobile wallet registration should be encouraging. Just to put it in perspective; as perdata from the State Bank of Pakistan, at the end of Jul-Sept 2012, the number of wallet accounts was at approximately 1.8 million, however by Jul-Sept 2015 the same has risen to 13 million.
It is definitely a heartening increase especially when seen from a financial inclusion angle. But it is important to consider the demographics of these new wallet owners, are they predominantly from the banked segment or the unbanked one? A relevant source for answering these questions is the Financial Inclusion Insights (FII) survey 2015 for Pakistan. The FII 2015 is a nationally representative survey with a sample of 6000 individuals. Besides covering other aspects of Pakistan financial inclusion landscape, the FII also provides interesting insights into the probable demographic composition of Pakistan’s wallet accounts.
To begin with, the FII 2015 predicts that most wallet owners already had bank accounts, more specifically only44% of mobile wallet owners did not have bank accounts. When seen as a proportion of their base samples, wallet owners with bank accounts constituted 8% of bank account holders, however, unbanked[1] wallet owners were only 0.61% of the unbanked sample.
So who are these unbanked wallet owners? And how are they different from the unbanked who did not opt for a wallet account?In the following paragraphs will go over a few significant differences between unbanked mobile wallet owners, and the unbanked who do not have a wallet account.
Awareness about mobile money seems to be low among this group as 45% of unbanked with no wallet accounts were simply unaware about any of mobile money brands out there. It won’t be wrong to assume that almost half of the unbanked with no wallet account don’t even know about the existence of a mobile money option.
Gender differences were also apparent, as FII 2015 predicts 77% of unbanked wallet owners to be male, and only 22% to be female. This might be because of cultural constraints in Pakistan that discourage
Mobile wallets (Such as Telenor EasyPaisa, Mobilink Jazz Cash etc) are often heralded as an innovative source of financial inclusion for the unbanked. And rightly so, mobile wallet accounts bypass the necessity of building and staffing a bank branch, and it also relieves its account holder from making the effort of going to a bank branch. Similarly, at least for Pakistan, its registration requirements makes it an easier option than a regular bank account.
Pakistan’s Financial Inclusion strategy for2015 recognizes the importance of mobile money in expanding “digital transactional accounts”, which the strategy recognizes as a key driver. In this regard, the recent upsurge in the number of mobile wallet registration should be encouraging. Just to put it in perspective; as perdata from the State Bank of Pakistan,at the end of Jul-Sept 2012, the number of wallet accounts was at approximately 1.8 million, however by Jul-Sept 2015 the same has risen to 13 million.
#Mobile banking helps #Pakistan’s poor & women by social & financial inclusion. #BISP
http://www.cambridgenetwork.co.uk/news/how-mobile-banking-helps-pakistans-poor/
Research carried out in Pakistan indicates that mobile phone banking can help alleviate poverty, improve women’s rights through financial and social inclusion and reduce corruption in developing countries.
The study by Dr Atika Kemal of Anglia Ruskin University’s Lord Ashcroft International Business School, is the first to look at how mobile banking innovation can help with the disbursement of government-to-person payments in state welfare programmes.
Dr Kemal studied the Benazir Income Support Programme (BISP) in Pakistan, which was launched in 2008 and is one of the largest social protection programmes in Asia.
BISP provides over 5.3 million low-income households with 4,500 Pakistani Rupees (approximately £34.50) every quarter. The payments are disbursed digitally to women only, as heads of the household.
Pakistan has a population of over 180 million, but only 23 million bank accounts, 11,600 bank branches and 6,232 ATMs across the country (compared to 70,000 ATMs in the UK). The shortage of banking infrastructure is particularly severe in rural areas. Mobile banking has become popular for the poor by providing bank accounts to advance financial inclusion in underserved communities.
The BISP payments were initially distributed to households in cash or money orders via a network of local parliamentarians and postmen. In 2010, mainly to improve transparency, visibility, security and efficiency in the delivery of social cash, a shift to digital technologies, including mobile banking, took place in selected districts.
However, due to the high costs in funding mobile handsets to women, besides other security reasons, mobile banking was gradually phased out and eventually replaced by the Benazir Debit Card.
BISP is primarily funded by the Government of Pakistan, but also receives financial support from multilateral and bilateral donor agencies, including the World Bank and the Department for International Development (DfID) in the UK.
Dr Kemal, an Associate Lecturer at Anglia Ruskin University, said: “The transition from cash-based to digital payments was really due to pressure from international agencies which had invested in the programme. While some political actors resisted the shift to mobile banking, it led to increased accountability and governance, and a reduction in administrative and transaction costs. Financial inclusion was really only a secondary objective for BISP.
“However, from the perspective of women, mobile banking provided flexibility and convenience to cash the full amount of grants at various locations such as banking agents, ATMs and point-of-sale machines via a secure PIN known only to the beneficiary. This eliminated the practice of politicians or postmen demanding bribes for delivering the cash payments at home.
“BISP is also responsible for women’s empowerment through social and political inclusion. Women were issued with national identity cards that were mandatory to register with BISP and to eliminate identity theft when cashing payments. This not only boosted their social standing and authority in their households but also granted political freedoms through assisting their rights to exercise their vote in elections.
“However, my study also found that the majority of women were illiterate, so they encountered digital and financial hurdles. Also, other infrastructural constraints, such as weak mobile signals and power outages in their homes, affected mobile phone usage. Women were also dependent on more literate family members or friends for reading text messages to notify them of payments.”
#Pakistan's economic reforms strategic, sustainable: World Bank. #economy http://www.brecorder.com/pakistan/business-a-economy/335530-pakistans-economic-reforms-strategic-sustainable-wb.html …
The World Bank (WB) Tuesday termed Pakistan's economic reforms as strategic, relevant and sustainable.
The remarks were made by WB Director, Finance and Markets Global Practice, Sebastian -A Molineus during a review meeting on WB's portfolio in Pakistan which was chaired by Finance Minister, Senator Mohammad Ishaq Dar.
The meeting was attended by WB delegation led by its Country Director, Patchamuthu Illangovan, senior officials of Ministry of Finance, Ministry of Commerce and Securities and Exchange Commission of Pakistan.
Molineus congratulated the Finance Minister on the successful implementation of the reforms and the resultant economic turnaround.
He highlighted that the government's reforms have also played a major role in increasing financial inclusion in the country.
Molineus expressed interest, on behalf of the World Bank, in initiating projects aimed at facilitating long-term financing in Pakistan, including housing finance.
The Country Director World Bank briefed the Finance Minister on the World Bank's portfolio in Pakistan, including the status of various ongoing development projects.
The Finance Minister appreciated the briefing from the Country Director and expressed satisfaction on the progress made so far on the various ongoing development projects being undertaken in Pakistan with the World Bank's support.
He expressed appreciation for the cooperation between Pakistan and the World Bank.
He also said that both parties must strive to further strengthen this relationship in order to take it to the next step.
The Finance Minister thanked Molineus for his remarks regarding the present government's successful economic reforms.
He highlighted that, after having achieved macroeconomic stability, the government is now focused on attaining higher, sustainable and inclusive economic growth.
He also welcomed the interest expressed by the World Bank in initiating projects for long-term financing.
He said that the government was always ready to cooperate with the World Bank on initiatives that can help improve the quality of lives of the people of Pakistan.
#ITU to open first ever #fintech center in #Pakistan in collaboration with #American researchers at U of #Washington
https://www.techjuice.pk/itu-to-open-first-ever-fintech-center-in-pakistan-in-collaboration-with-a-us-research-group/
Information Technology University (ITU) and Digital Financial Services Research Group (DFSRG) University of Washington (Seattle, USA) have signed a Memorandum of Understanding (MoU) to establish a pioneering FinTech center in Pakistan.
The agreement was signed by Dr. Umar Saif, Vice Chancellor Information Technology University (ITU) along with Dr. Richard Anderson, Head DFSRG and Professor, Department of Computer Science and Engineering, University of Washington. The aim of the research center is to take Pakistan forward in financial technology space by adopting digital financial services countrywide.
Under the agreement, a collaborative research will be conducted in areas of cybersecurity, authentication, fraud prevention, financial education, financial management, data analytics, and customer experience studies in digital financial services. The FinTech center will also promote the digitization of Government-to-Person (G2P) and Person-to-Government (P2G) payments in Pakistan.
Dr. Richard Anderson said that it was the first ever collaboration in the World with Pakistan, which will be extended to the Africans and other Asian countries. Dr. Umar Saif stated that it would facilitate the smartphone transactions and establish transparency in the system.
DFSRG is a research group at Washington University supported by the Bill and Melinda Gates Foundation. It aims to improve the abilities of banks and mobile operators by deploying Digital Financial Service (DFS) products and providing technological solutions.
#Pakistan banks embark on #financialinclusion-
http://www.khaleejtimes.com/business/banking-finance/pakistan-banks-embark-on-financial-inclusion
Financial Inclusion Plan's target is to raise number of customers with access to bank accounts
The Pakistani banking sector, which has already been highly profitable, is on track to expand further with millions of new customers set to enter its fold owing to financial inclusion initiatives.
The priority target of the Financial Inclusion Plan (FIP) is to raise the number of customers with access to bank accounts and services to 50 per cent of the adult population. The number was 23 per cent in 2015 and 12 per cent in 2008.
These are some of the key objectives of the State Bank of Pakistan (SBP), the central bank, and its two associates - Pakistan Microfinance Investment Company (PMIC) and the Central Directorate of National Savings (CDNS) - in launching the Pakistan Financial Inclusion & Infrastructure Project. It has the potential to expand the banking sector, the overall economy and fund new infrastructure projects. The World Bank has come up with a $130 million assistance programme for the FIP.
This decision has been welcomed by the government, bankers and the millions of villagers who have never visited a bank, written a cheque or dealt in any other banking instrument.
What will be the profitability and benefits for service providers and the common man? "The sky is the limit," Finance Minister Ishaq Dar told Khaleej Times.
"The programme will impact the people and the whole economy in a scale never imagined in the entire developing world," said Mohammad Ashraf Wuthra, governor of the SBP.
A spokesman of the SBP's Development Finance Group (DFG) said the project aims at providing banking services to persons, households and businessmen, better access to financial services and banking via modern digital payments. "This will be assisted by fast-growing IT services," the spokesman said.
The SBP will channel the required funds through the PMIC. It is the PMIC's responsibility to provide funds to institutions such as micro finance banks and CDNS branches to develop new financial products to attract people with small savings. The initiative will also help people with savings to fund national infrastructure projects and provide funds to small and medium industries and commercial units at reasonable costs.
Owners of small businesses and households are still seeking greater access to credit, banks, the financial market and other sources of finance. After the policy was implemented to expand financial inclusion from 2008 to 2015, the number of people and households with access to various types of financial services had risen from 12 per cent in 2008 to 23 per cent in 2015.
Apart from the Financial Inclusion Plan, the banks are moving ahead in other areas too. For instance, the growth in FDI inflows is enhancing banks' profitability and financial transactions. The SBP reported that FDI inflows rose 9.9 per cent during the first seven months of the financial year 2016-17 as compared to 2015-16. The fund inflow was mainly from the Netherlands, China and Turkey.
In another development, the SBP has asked banks, forex firms and money changers to accept old US dollar bills from the public. People, including overseas Pakistanis visiting home, have raised complaints that money changers and banks are not accepting old US dollar bills and bills of smaller denominations. In cases where they accepted old bills and bills of $5, $10 and $20, the customers had to suffer losses in terms of lower rates. This move by the SBP should be a big help to all Pakistanis at home and abroad.
#Pakistan to launch state-of-the-art E-payment gateway. #PayPal #AliPay #ecommerce
https://tribune.com.pk/story/1420372/pakistan-launch-state-art-e-payment-gateway/
Finance Minister Ishaq Dar announced on Friday that Pakistan would open international electronic payment gateways ahead of the likely arrival of PayPal and Alipay in the country.
While presenting the budget for 2017-18 in the National Assembly, the finance minister said the State Bank of Pakistan (SBP) was developing a state-of-the-art e-gateway at a cost of Rs200 million.
“The system will facilitate transactions through mobile banking,” he said. “The Rs200-million investment is being undertaken by the SBP.”
Even though PayPal is a world-renowned international e-payment system, Alipay is not as common across the globe. However, recently, Prime Minister Nawaz Sharif developed an understanding with Alibaba Group Founder and Executive Chairman Jack Ma, who also owns Alipay, to open its office in Pakistan. Alipay will enable Chinese and Pakistani traders to make easy e-payments between the two countries.
Meanwhile, information and communications technology expert Parvez Iftikhar said the establishment of the e-gateway system at the highest regulatory level – the SBP – was an effort towards replacing the existing manual trade payment system by opening Letters of Credit.
Digital Pakistan
The finance minister said the telecommunication sector was one of the important pillars of the country’s economic development. Hence, in order to further incentivise the sector, customs duties at the rates of 11% and 16% were being withdrawn and a uniform rate of 9% regulatory duty was being levied on telecom equipment in the coming fiscal year.
Additionally, Dar said start-up software houses would be exempted from income tax for the first three years. Similarly, exports of information technology (IT) services from Islamabad and other federal territories will be exempted from sales tax.
Mobile phone industry – another important element in the IT sector – received a further relief as withholding income tax on mobile calls was reduced from 14% to 12.5% and federal excise duty was reduced from 18.5% to 17%.
“We hope that provincial governments will also reduce the rate of sales tax on mobile industry,” he said. “In order to encourage the use of smartphones, the customs duty will be reduced from Rs1,000 to Rs650.”
Iftikhar commended the incentives and tax relief for the IT sector, which were meant to enable industrial players to invest more in the sector. “Digitalising Pakistan is the way forward. This is how we will cope with the developed countries,” he said.
Nevertheless, he added more could have been done to achieve a faster growth in the sector. “Reduction of withholding tax on phone calls and duty on smartphones is an encouraging development. However, calls and phones should have been made tax-free in the larger interest of digitalising the economy.”
Branchless banking
Dar announced exemption from withholding tax on cash withdrawals by branchless banking agents.
The move has been undertaken to realise the government’s dream of providing 50% adult population of Pakistan access to banks under its Financial Inclusion Strategy 2020. At present, 25% adult population has access to formal banking channels.
E-commerce and IT need to watch out for the budget
Iftikhar said the exemption from withholding tax on cash withdrawals under branchless banking would enable the government to document the economy, which would be one of the great efforts towards minimising the size of undocumented economy.
“Progress in almost every sector of the economy – like banking, agriculture, education, health and governance – is now linked with adoption of telecommunication,” he said.
Meanwhile, Jazz Director Communications Anjum Rahman said the government was supporting the agenda of ‘Digital Pakistan’, which was in line with the company’s vision and aspirations.
#Fintech Startups in #India & #Pakistan Find A Champion In Emerging Market Accelerator Called DFS Lab via @forbes
https://www.forbes.com/sites/chynes/2017/07/18/south-asian-fintech-startups-find-a-champion-in-this-emerging-market-accelerator/#33e128ff3a64
Owais Zaidi was sitting in traffic when a dilapidated-looking cab pulled up next to him. The cabbie asked to borrow 1,000 Pakistani rupees so he could get his tires changed, explaining that a market loan would cost him nearly 50 rupees a day in interest. Zaidi was moved by the man’s plight, and he gave the money as charity rather than a loan. But the encounter got him thinking about the millions of underbanked consumers in Pakistan who face predatory lending practices.
“The guy looked genuine so I gave him money, but it really bothered me how the poor are exploited,” Zaidi said. “Based on my experience consulting with banks, I know how straight-jacketed they are in their policies as well as thoughts.”
Zaidi decided to do more than help this one cabbie. In 2016, he founded CreditFix, a credit marketplace that draws on alternative data to assess creditworthiness among unbanked consumers. The company will launch a pilot program in Pakistan in August with 50,000 potential customers, Zaidi said. CreditFix’s platform will use borrowers’ work histories, mobile top-up records, and utility payments to generate credit scores that will then be visible to lenders who use the marketplace.
“The core goal of CreditFix is to facilitate the underserved and unserved segments of the population in getting access to fair credit, primarily for revenue generating assets,” Zaidi said.
CreditFix’s launch was aided in part by Digital Financial Services Innovation Lab (DFS Lab), a Bill & Melinda Gates Foundation-backed accelerator that supports fintech startups in the emerging markets of South Asia and sub-Saharan Africa. DFS Lab provides companies with grant money and is developing an investment model as well. However, the ultimate goal is to connect startups with investors who can provide advice and funding as these early-stage businesses evolve. The organization offers regular mentorship, along with access to resources such as Amazon Web Services and marketing and mobile app support through the Global Accelerator Network (GAN). DFS Lab aims to provide the types of support that are vital to startups and are often lacking in developing markets.
“In Silicon Valley, it’s still hard, but there’s a whole really rich ecosystem that happens -- networking, mentorship, an ethos and community around being an entrepreneur,” said DFS Lab Director Jake Kendall. “Those elements are really missing in developing countries. It’s very hard to connect with people who are at the global frontier.”
Access to qualified, experienced investors can prove particularly important, because predatory investors are prominent in emerging markets, according to Kendall. In some instances, the investors don’t understand the startup space because they’re coming from vastly different industries. In others, they’re focused solely on making money off the companies rather than helping them grow sustainably. The team at DFS Lab tries to prevent such failures by getting quality companies in front of investors who can genuinely assist them.
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With two billion adults still without bank accounts throughout the world, the need for innovative financial services is real. DFS Lab and the startups with which it works have a real opportunity to help meet that need by emphasizing the unique circumstances of underserved consumers in emerging markets.
#financialliteracy in #Pakistan at 26% higher than #India's 24%, according to S&P Survey
http://gflec.org/wp-content/uploads/2016/02/Gallup-country-list-with-score.pdf …
https://pbs.twimg.com/media/DFtEsMDUAAAD7DU.jpg:large
Pakistan Govt to launch $130m financial inclusion project
https://www.dawn.com/news/1313172
The government is embarking on the Pakistan Financial Inclusion and Infrastructure Project aimed at increasing access to financial services for households and businesses by improving usage of digital payments in the country.
Two World Bank institutions — International Bank for the Reconstruction and Development and the International Development Association — will jointly provide $130 million finance for the project. The project will be implemented by the recently-established Pakistan Microfinance Investment Company, the Central Directorate of National Savings and the State Bank’s development finance group.
Requesting assistance for the project, the government has informed the World Bank that the project will support a holistic national financial inclusion strategy (NFIS).
It will focus on the development of market infrastructure and the ecosystem that will facilitate access and usage of digital payments and financial services.
Access to credit for micro, small and medium enterprises will be supported by a line of credit that will catalyse private sector financing and focused interventions including technical assistance in line with the NFIS.
In 2015, the government launched the National Financial Inclusion Strategy (NFIS) with a vision to allow individuals and firms access to a range of quality payments, savings, credit and insurance services which meet their needs with dignity and fairness.
In the last 25 years, Pakistan’s financial sector has gone from one dominated by underperforming state-owned banks to a modern and sound financial sector dominated by private banks. The banking sector accounts for 75 per cent of financial sector assets, with the balance in the National Savings Scheme (16.5pc); insurance companies (5pc); non-bank financial institutions (4.0pc); and microfinance institutions (0.5pc).
The microfinance sector is small in terms of assets, but is significant in terms of financial access. Financial soundness indicators indicate that the banking sector is generally sound, liquid and profitable. Islamic finance is growing rapidly, and currently accounts for 11pc of sector assets.
As a result, Pakistan has the highest penetration of mobile money accounts in South Asia at 5.8pc of the adult population, compared to the South Asian average of 1.9pc.
The gender gap on mobile accounts is much narrower than the overall gap for accounts. Despite these achievements, financial access remains low.
According to World Bank Global Financial Inclusion Database (FINDEX), only 13pc of adults in Pakistan had access to a formal account in 2014, far behind Sri Lanka at 83pc, India at 53pc and Bangladesh at 31pc.
(Germany's) InsuResilience Investment Fund to acquire 25pc equity stake in (Pakistan's) Asia Insurance:
http://nation.com.pk/business/22-Sep-2017/insuresilience-investment-fund-to-acquire-25pc-equity-stake-in-asia-insurance
LAHORE - The InsuResilience Investment Fund, set up by the German Development Bank KFW and managed by Swiss-based Impact Investment Manager Blue Orchard Finance, has entered into an agreement to acquire a significant minority stake in Lahore-based Asia Insurance Company Ltd, a general insurance company offering agriculture insurance to over 100,000 farmers in Pakistan.
The Blue Orchard managed InsuResilience Investment Fund and Asia Insurance Company Ltd, an innovative and fast growing general insurance company based in Pakistan, have signed an agreement according to which the Fund will subscribe to a rights issue in the insurance company for a 25 percent equity stake in the company post-equity injection, taking the company’s total equity to approximately Rs 1.04 billion. Asia Insurance Company is a leading player in agriculture, livestock and farm implements micro-insurance with approximately 44% of its gross written premium in 2016 coming from these areas. The proceeds of the investment will help Asia Insurance Company to grow by increasing the company’s risk capital and supporting its underwriting capacity in agriculture, hereby extending its outreach to low income farmers.
The InsuResilience Investment Fund, as part of the InsuResilience Initiative of the German G7/G20 presidencies, aims to contribute to the adaption to climate change by improving access to and the use of climate risk insurance in developing countries and emerging economies. The Fund has been set up as a public-private partnership and combines private equity and private debt investments. The investment is subject to regulatory approvals.
“Pakistan experiences various natural disasters and consequences of climate change, but has a low level of insurance coverage, leaving a significant part of its low-income population without protection. We are looking forward to partnering with Asia Insurance Company Ltd, a leading Pakistani insurance company, to extend the insurance coverage of poor and vulnerable households,” says Ernesto Costa, Co-Head of Private Equity at BlueOrchard.
“The agriculture sector directly and indirectly makes up a large portion of Pakistan’s economy. Now more than ever, with our country being impacted by recurring natural calamities, the need for extensive loss mitigation for this sector is paramount. Asia Insurance has been actively involved in providing coverage for farmers, crops, tractors and other various factors of this sector for 5 years, and with InsuResilience Investment Fund’s investment, will expand our outreach and our range of insurance products for this market with a view to innovative solutions tailored to Pakistan’s needs,” says Ihtsham ul-Haq Qureshi, CEO of Asia Insurance Company Ltd.
Luxembourg-based InsuResilience Investment Fund has been set up by KfW, the German Development Bank, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). The overall objective of the InsuResilience Investment Fund is to contribute to the adaptation to climate change by improving access to and the use of insurance in developing countries. The specific objective of the fund is to reduce the vulnerability of low-income households and micro, small and medium enterprises (MSME) to extreme weather events. The InsuResilience Investment Fund has been set up as a public-private-partnership and combines private debt and equity investments in two separately investible sub-funds as well as technical assistance and premium support.
Asia Insurance Company Ltd is a general insurance company based in Lahore, authorized and supervised by the Insurance Division of the Security Exchange Commission of Pakistan.
Financial inclusion in Pakistan increases to 30% - Profit by Pakistan Today
https://profit.pakistantoday.com.pk/2023/02/08/financial-inclusion-in-pakistan-increases-to-30/
https://portal.karandaaz.com.pk/dataset/financial-digital-inclusion/1038
KARACHI: Financial inclusion in Pakistan has increased by 9 basis points from 2020 to 2022 and women’s access, specifically has hit a double-digit percentage for the first time, as recorded by a survey conducted by Karandaaz Pakistan.
As defined by the World Bank, “financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.” This means conducting transactions through banks, mobile money and fintech.
The Karandaaz Financial Inclusion Survey (K-FIS) measures the percentage of adults above the age of 15 who report having at least one account in their name with an institution that offers a full range of financial services that is also documented by the government of Pakistan.
Following a significant jump in financial inclusion between 2017 and 2020, K-FIS recorded a substantial rise in the level of financial inclusion from 21% in 2020 to 30% of adults in 2022. Registered mobile money users more than doubled with an increase from 9% to 19%, while registered bank users also increased by 4 basis points over the same period.
By region, Islamabad Capital Territory (ICT) recorded the highest level of financial inclusion at 45%, followed by Gilgit Baltistan at 35% and Azad Jammu & Kashmir at 34%.
Looking at the division by gender, male registration accounted for the bulk of financial account registrations in 2022 with 47% having at least one registered financial account. Comparatively, only 13% of women are recorded to have at least one registered financial account. Although women’s percentage accounts for less than half of their male counterparts, the financial account registration for women has reached double digits for the first time.
Overall, the largest increase was seen in mobile money wallet users, as active usage increased from 8% in 2020 to 16% in 2022. Active usage also saw an increase in bank account holders, indicating an increase from 12% in 2020 to 14% in 2022.
Addressing the webinar held by Karandaaz Pakistan on February 7, 2023, Noor Ahmed, Director of the Agri Finance and Financial Inclusion Department of the State Bank of Pakistan (SBP) said, “Over the years, there has been significant progress on financial inclusion. Key initiatives such as RAAST have been transformative in furthering the inclusion of the marginalised.”
Karandaaz Pakistan is a not-for-profit special-purpose vehicle set up under Section 42 in August 2014. The company is the implementation partner of the Enterprise and Asset Growth Programme (EAGR) and Sustainable Energy and Economic Development (SEED) programme of the UK’s Foreign, Commonwealth & Development Office (FCDO).
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