KARACHI - The State Bank of Pakistan Deputy Governor Kazi Abdul Muktadir has advised consumer associations, trade bodies, Banking Ombudsman, financial & legal functionaries, banks and Competition Commission to join hands in eradicating financial consumer malpractices for building an inclusive and stable financial sector in Pakistan.

While addressing on ‘Financial Inclusion, Consumer Awareness and Protection’ at the 4th Conference on Financial Services and Consumers here at a local hotel, he regrettably pointed out that financial sector in Pakistan remains restricted in its outreach as the majority of population remains either excluded or informally served.

‘This limited access is reflected in the total number of bank accounts, presently around 32 million, and the total number of borrowers, which is only 5.7 million,’ he added. This high level of financial exclusion is largely attributed to two major factors, i) lack of appropriate product offering by financial service providers and ii) lack of public awareness about availability of financial services and products, he said.

Abdul Muktadir said that SBP is cognizant of high financial exclusion in the country and committed to tackling the associated challenges in a sustainable manner. He outlined the multi-pronged financial inclusion strategy of SBP.

Introduction of Basic Banking Account (BBA), requiring commercial banks operating in Pakistan to provide basic banking facilities to the low income people of the country, a BBA can be opened with a minimum deposit of Rs1,000 carrying no fee, no limit of minimum balance and offering full ATM facility.

Introduction of Annual Branch Licencing Policy which requires commercial banks with 100 branches or more to open at least 20pc of their branches outside big cities and set up branches in Tehsil Headquarters where no branch of any bank exists.

A world class regulatory framework will enable commercial microfinance and branchless banking in Pakistan and a national microfinance strategy.

SBP with the assistance of UK Department for International Development (DFID) and other donors launched programmes to increase access to finance in the country, he said, adding that the DFID-funded Financial Inclusion Program (FIP) aims to address financial exclusion through a variety of interventions.

Abdul Muktadir pointed out that FIP interventions largely focus on addressing market failures and industry bottlenecks, while addressing issues of fair treatment of clients and consumer protection.

FIP is supporting establishment of a separate national level Credit Information Bureau for microfinance clients, he said adding that FIP is also supporting Pakistan Microfinance Network (PMN) to introduce the Transparent Pricing Initiative in Pakistan. ‘This initiative will make the prices for the microfinance market available for the first time in history,’ SBP Deputy Governor added.

He further said that FIP is also supporting strengthening consumer protection under the industry-led smart campaign that is seeking to improve client protection mechanism in the microfinance sector.