SBP launches 10-year strategy

KARACHI - Dr Shamshad Akhtar, Governor State Bank of Pakistan, has said that SBP is launching a ten-year Financial Sector Strategy with an explicit objective to help country achieve higher and sustainable economic growth; develop a dynamic, robust and stronger banking system; mobilise the domestic and foreign resources for private investment and deepen the financial penetration for poor and underserved regions. She made this announcement while addressing the Development Finance Conference on 'Expanding Frontiers of Financial Access in Pakistan' organised by SBP at its Learning Resource Centre in Karachi on the eve of 60th anniversary of the State Bank of Pakistan. The conference, which was inaugurated by the Prime Minister, was attended by  Sindh Governor Dr Ishratul Ibad, Sindh Chief Minister Syed Qaim Ali Shah, Federal Finance Minister Syed Naveed Qamar, Federal Minister for Labour, Manpower and Overseas Pakistanis Syed Khursheed Ahmed Shah, Special Assistant to Prime Minister on Finance, Revenue and Economic Affairs Ms Hina Rabbani Khar and Special Assistant  to Prime Minister Ms Shahnaz Wazir Ali. "This vision that we are articulating, will take forward the banking sector to new heights, building on the outstanding performance of the sector in a short span of 4-5 years," she added.    Dr Akhtar said that the objectives of the Financial Sector Strategy will be to broaden and deepen the financial system to help Pakistan to: Achieve higher and sustainable economic growth; Develop a dynamic, robust and stronger banking system; Mobilise the domestic and foreign resources for private investment (which has to be the key driver of the economy), and deepen financial penetration for the poor and underserved regions. She said that prerequisite for financial sector growth, however, is macroeconomic and political stability and augmentation of the enabling policy environment in the real sector.   "Assuming these preconditions are restored, the ten-year strategy will stimulate sharper growth in financial assets and aims to double the private sector credit/GDP ratio," she asserted. SBP Governor said that the strategy would be financially inclusive, supporting the small savers and meeting the requirements of small borrowers in the agriculture, housing, SME and microfinance sectors.  It would aim to modernize the wholesale and retail markets and reduce the systemic risks of the financial system by developing an adequate safety net for the small depositors, while reforming the regulatory architecture to ensure that the central bank can play an effective regulatory and supervisory role, she added. No reforms are complete without also ensuring further strengthening of the central bank, she said and added that in this context, the State Bank has worked to modernize the central bank legislation in line with the international best practices. "Ours is one of the oldest laws in the world and as such it includes some outdated provisions, even though the law has served the central bank well in delivering several of its functions, with a fair degree of autonomy under the oversight of its Central Board of Directors," she said and added at the same time, there is the need to launch  comprehensive legislative reforms which would put in place an adequate framework for Consumer Protection, prevention of Financial Crimes, Financial Safety Nets and Lender of Last Resort Functions etc. that now have been adopted by most developed and developing countries. Dr Akhtar shared with the audience major areas of reforms envisaged in the Financial Sector Strategy. The strategy advocates: (i) Adoption of a holistic financial inclusion program. (ii) Strengthening consumer protection and financial education.   (iii) Consolidating and strengthening the banking sector by promoting continued mergers and acquisitions, while seeking to restructure the outstanding public financial institutions.    (iv) Strengthening competition and efficiency.   (v) Strengthening prudential regulation and supervision.

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