State Bank of Pakistan gives detailed policy on equality and financial inclusion

The State Bank of Pakistan (SBP) unveiled a policy draft back in December which talked about ensuring women’s equal access to financial services as it said women largely lag behind men in terms of financial inclusion and contribution to economic activity.

According to the data in the policy brief released by SBP, almost 93 percent of adult women in Pakistan do not have a formal financial account. Citing the World Bank’s data, the central bank said 21 percent of adults in Pakistan have a formal financial account as of 2017, increasing from 13 percent in 2014. However, adult women’s formal financial account ownership has increased from 4.8 percent in 2014 to 7 percent in 2017 while men’s account ownership has increased from 21 percent in 2014 to 34.6 percent in 2017.

Moving further in the policy draft, five key pillars have been identified under which actions are targeted towards improving institutional diversity, product diversification and development capability, customer acquisition and facilitation approaches towards women segments, collection of gender disaggregated data, and prioritising gender focus in SBP’s policies.

The policy recommendations will be applicable on SBP’s regulated entities, including commercial banks, Islamic banks, microfinance banks, development finance institutions and electronic money institutions. Furthermore, Securities and Exchange Commission of Pakistan is expected to adopt a similar, yet customised, gender policy for the non-banking financial sector, the SBP said in the policy brief.

The SBP said currently only 13 percent of the staff of banks and 1 percent of branchless banking agents are women. “Financial institutions shall be asked to develop policies to improve gender diversity and ensure minimum 20 percent female participation in the work force by 2023,” said the SBP.

The SBP said the financial institutions need to create a specialised department within 6 months of issuance of this policy. They may also collaborate with the incubation centers in providing awareness and marketing about their digital financial products and services.

“Within 6 months of its creation, the specialised women financial services department shall develop products for women that are well researched and backed by demand side insights.” The State Bank said women’s financial inclusion cannot be improved without understanding their needs with careful attention.

“However, women customers especially entrepreneurs, feel intimidated to visit a bank branch and are not facilitated effectively. Therefore, to enable banks to improve facilitation of women customers and entrepreneurs, women champions shall be deployed at all customer touch points,” the policy said.

“The women champions must have undergone gender sensitivity training, and should be well versed with the bank’s products and government and SBP’s schemes for women entrepreneurs. The resources should be deployed at-least at 75 percent of all touch points within a period of three years of policy launch.” The SBP said the absence of data and targets can dilute FI’s focus on the gender in finance, and impede development of informed policies and associated actions for closing the gender gap. “Therefore, under the policy, all institutions under SBP’s ambit will be instructed to collect and report gender disaggregated data related to gender disaggregated outreach of products and services, to SBP. “

The State Bank said it will set up a policy forum on gender and finance to discuss opportunities and challenges in women’s financial inclusion, internalise gender mainstreaming within organisations, and review the existing legal and policy framework for identification of bottlenecks in women’s financial inclusion.

Following the release of the policy brief which was prepared with the help of the World Bank, a Consultative Dialogue on SBP’s Gender Financial Inclusion Policy was organised by the World Bank. The focus of the webinar was to draw on global experiences on how gender responsive policies may work best in the context of a developing country like Pakistan. The draft of the policy is available here.

The webinar’s panel consisted of highly qualified and global renowned experts who gave their view on the steps being initiated to increase women’s financial inclusion In Pakistan. The panelists were Dr Reza Baqir, Ms. Sima Kamil , Mary Ellen Iskenderian, Ms. Parwati Surjaudaja and Dr Caren Grown.

The webinar featured remarks by Vice President for the South Asia Region, World Bank, Mr. Hartwig Schafer, and Vice President for Asia and Pacific, IFC, Mr. Alfonso Garcia Mora appreciating SBP’s efforts for improving gender financial inclusion in Pakistan.

Ms. Sima Kamil, Deputy Governor, State Bank of Pakistan :

The session was opened by the deputy Governor of SBP, Ms. Sima Kamil who is the first woman appointed as Deputy Governor of SBP and is one of the most senior and prominent bankers in the country with an experience of more than three decades. While giving a presentation in the webinar, she said that the concept of financial inclusion is really important to her at a personal level because in terms of female financial inclusion, even the needle hasn’t moved despite trying many things. She expressed her hope that the new policy which is a much needed policy will bring about a positive change . According to her, the gender gap isn’t closing. Sima Kamil expressed her target to financially include 20 million women by the end of 2023. According to her that on the face of it, the numbers which are 18 million accounts look at par but the issue arises when it comes to the active account holders which are only 11 million women and the definition of active account holders has been done on the basis of one transaction a year which is not truly financial included. She said that a lot needs to be done to move the needle and for that gender intentional policies are needed as the gender neutral model has failed . According to her that out of the pillars laid out under this policy, the first pillar talks about gender diversity I’m financial institutions which talks about increasing the share of women in the work force especially in branchless banking. The second pillar talks about services and product where the SBP aims to introduce women centric products where each financial institution will have a specialised banking department for women. The proposed timeline of this unit is 6 months after the introduction of the policy.

The third pillar is where women will be employed at customer points so that women who are hesitant to participate in the banking sector are able to use the bank without any fear and for this purpose the banking staff will be trained to deal with women customers.

The fourth pillar talks about collecting data from financial institutions and for, policies in the light of that data in order to facilitate women.

Following the presentation, a panel discussion was moderated by the Governor of SBP, Dr Reza Baqir. According to a press release issued by SBP, the panel discussants included international participants including, Ms. Caren Grown, Global Director Gender, World Bank; Ms. Mary Ellen Iskenderian, President & CEO, Women’s World Banking; and Ms. Parwati Surjaudaja, President Director, Bank OCBC NISP, Indonesia. The discussion allowed renowned experts in this field to share their experiences of gender mainstreaming and aided the consultative phase of SBP’s Gender policy.

Dr. Reza Baqir, Governor, State Bank of Pakistan :

While speaking in the webinar, Dr Reza Baqir said that all central banks have goals such as maintaining financial stability etc but besides this it has been learnt that there are market failures that take place in countries and one of them is financial inclusion and one of the reasons of this particular failure is the gender gap in various countries and over the reason it has been learnt that the central bank must work on addressing this area and now this trend is growing popular in international financial institutions. Dr Baqir said that as a country, Pakistan needs to do a lot more to bring forward women in the country. Women led businesses need to be given priority such as by bringing women in public sector institutions. The governor said that SBP’s journey towards making a policy for financial inclusion started a year ago after it was realised that a lot of work needs to be done to improve financial inclusion in Pakistan. Dr Reza Baqir said that the policy included domestic consultations with all stakeholders such as policy makers, financial institutions, corporate organisations etc. The governor of the central bank expressed his excitement since this webinar was the first international consultation on this issue.

Ms. Parwati Surjaudaja,President Director, OCBC NISP :

During the panel discussion, Ms. Parwati Surjaudaja who is the President Director, CEO of PT Bank OCBC NISP and the Managing Director of Treasury shared the work that her bank in Indonesia is doing and what Pakistan can learn from Indonesia’s success in improving financial inclusion as both countries have growing Islamic banking markets. According to her, they built digital platforms for companies and empowered customers for doing easy transactions as a physical infrastructure on such a large scale with a population of 270 million people on 17,000 islands wouldn’t have been possible. She also told that her bank is one of the first banks to have gender financing from the IFC. She expressed her strong belief in gender equality which is very important for economic growth as it helps in boosting the GDP. According to Ms. Surjaudaja, women consist of 60% of Indonesia’s SME sector so the incentive for banks to cater women is huge. She further added that the main purpose of financial inclusion in Indonesia is to help women operate their businesses in an efficient way and to help them in capacity building while at the same time fulfilling other domestic duties that an eastern society expects them to do.

Mary Ellen Iskenderian, President and CEO, Women’s World Banking :

Following Ms. Surjaudaja, Ms. Mary Ellen Iskenderian who is the President and CEO of Women’s World Banking, the global nonprofit devoted to giving low-income women in the developing world access to the financial tools and resources they require to achieve security and prosperity. According to her, she was really excited to hear what Indonesia is doing in terms of financial inclusion and that is exactly what is required in order to help the women/consumers financially and socially. She then referred to some of the work her organisation did in Kenya at the Kenya Commercial Bank which is the African country’s largest bank. According to Ms. Iskenderian, the bank in Kenya streamlined their procedures in order to facilitate the women by taking measures such as training their staff, handing out more cash flow based loans rather than against a collateral as keeping a collateral is generally really difficult for women throughout the world especially in developing countries. According to her, the most important step without which the results of the other steps weren’t up to the mark was the gender safety trainings that were given in the a number of branches of the Kenya Commercial Bank where the employees were trained and were given the awareness regarding its importance. The results of these trainings reflected a dramatic change from the past. One of the results was that 30% of the loans were handed out to women for businesses. She also shared that women owned businesses have made a demonstrated change in her experiences especially in Pakistan’s retail sector.

Caren Grown, Global Director, Gender, World Bank :

Dr Caren Grown is an internationally recognized expert on gender issues in development also took part in the panel discussion. DrGrown joined the World Bank in 2014 as Global Director of the World Bank’s Gender Group, where she has led the institution’s development and implementation of a Gender Strategy that deliberately and strategically targets gaps in endowments, jobs, assets, and increasing women’s leadership and voice. During the panel discussion, she highlighted that gender neutrality in practice becomes an unconscious gender bias due to which women are ignored; therefore, a gender lens should be applied to financial products and services.

According to a Press Release from SBP, the webinar was a very helpful to get feedback from relevant global experts in gender policy and practice. The Banking on equality policy will be reviewed in line with this feedback and the valuable feedback from Pakistani stakeholders and launched in March 2021.