Efforts to make digital financial services available to Pakistanis have made significant progress, with 60% of adults benefiting from digital financial services under the National Financial Inclusion Strategy (NFIS) of the State Bank of Pakistan (SBP). Nevertheless, major obstacles remain, including Pakistan’s huge financial exclusion gap. To overcome these challenges, we integrate innovative solutions such as Asaan Mobile Accounts, Asaan Digital Accounts, and RAAST payment systems with established mobile digital identity and branchless banking frameworks.
To address low levels of financial inclusion and the unbanked population, Pakistan introduced the NFIS in May 2015 as part of efforts to promote digital banking and economic inclusion. Initially, it aims to achieve universal financial inclusion by increasing access to 50 percent of the adult population by 2020. Although Pakistan’s NFIS has incorporated gender considerations, it has failed to achieve its goals regarding women’s financial inclusion.
In January 2023, the SBP approved initiatives such as setting up five digital banks based on digital identity and leveraging technology to tap over 100 million unbanked adults in the country.
NFIS Research Review
A study on financial inclusion in South Asian countries published in Science Direct points out that Pakistan, along with Afghanistan, has one of the lowest levels of financial inclusion in the region. The results highlight gender, age, wealth, and education as some of the socio-economic and demographic factors that influence access to financial services in Pakistan. The study further focuses on policy interventions such as national financial inclusion strategies that can help overcome these barriers. However, despite the identified challenges, there remains the potential to increase financial inclusion through potentially targeted policies, which could help improve financial inclusion across different groups, especially those living below the poverty line in Pakistan. Economic growth will also be promoted by empowering people.
A recent report by the Asian Development Bank reveals substantial gender disparities in Pakistan’s economy. Despite improvements in financial inclusion, women remain largely excluded, with only 8 percent of their male counterparts having formal financial accounts, compared to 30 percent of their male counterparts. The problem is exacerbated by the lack of clear targets for women’s financial access in Pakistan’s NFIS from 2015 to 2020. Additionally, gender-neutral legislative and regulatory frameworks limit women’s involvement in the financial sector. The World Bank’s Women, Business and Law Report 2023 gives Pakistan a poor rating, reflecting a legal system that hinders women’s economic participation. Policymakers lack the gender-disaggregated data and research needed to inform women-centered policies and close the gender gap. Regulators can play a leading role in creating an atmosphere that promotes women’s financial inclusion.
Main initiatives in NFIS Pakistan
In a press release issued by the SBP, Governor Jameel Ahmad emphasized the importance of an inclusive financial sector in promoting broad-based development and improving the effectiveness of monetary policy. The central bank’s commitment to promoting financial inclusion can be seen in a variety of national strategies and programs, including the NFIS, the National Financial Literacy Program, and the Bank Equality Policy.
In view of these initiatives, SBP has launched several initiatives under NFIS that are planned to serve different strata of society. Notable projects include RAAST, ASAAN Digital Account, ASAAN Mobile Account, and the recently introduced Digital Bank. Additionally, specific initiatives such as the SME Asaan Loan Scheme, the Refinance and Credit Guarantee Scheme for Women Entrepreneurs, and the Prime Minister’s Youth Business and Agricultural Loan Scheme aim to expand access to finance among disadvantaged communities. There are also programs.
NFIS vision and challenges
NFIS paves the way for Pakistan’s financial future. We aim to achieve universal access to a wide range of high-quality financial services by 2025. The idea is not limited to traditional savings and checking accounts, but also includes digital transaction accounts. This will ensure that everyone using a digital identity has equal access to different types of payment systems, savings, credit facilities, and insurance.
NFIS has begun to achieve these goals by prioritizing improvements to financial services distribution networks, especially in underserved and rural areas. We also recognize that there are systemic barriers that prevent marginalized groups, such as women, from easily accessing basic financial accounts. Therefore, more needs to be done to make them accessible.
Another key objective of this strategy is to promote people’s financial literacy and financial competency, enabling them to make better decisions about money matters. The plan also emphasizes a stable know-your-customer (KYC) regime, strengthening the resilience of the country’s payment system and shifting key payment flows from cash to digital platforms. As Pakistan plots its course towards 2025, the NFIS will serve as a guiding inspiration to ensure that all individuals and businesses have access to a wide range of quality financial services designed to suit their needs and aspirations. We are driving focused efforts to build a more inclusive financial environment.
The NFIS initiative, backed by digital identity solutions and innovative banking initiatives, represents an important step towards financial inclusion and economic empowerment. Despite significant progress, challenges remain, particularly how to close the gender gap and reach vulnerable populations, and how to address these challenges and provide universal access to high-quality financial services through the NFIS. progress to ensure that this goal is realized for all Pakistanis by 2025.
The role of biometric mobile banking in improving financial inclusion in Pakistan
Article topics
Digital Identity | Financial Inclusion | Financial Services | Mobile Banking | National Financial Inclusion Strategy | Pakistan
