Branchless Banking (BB) has witnessed a phenomenal growth during 2016-17, as the number of BB accounts increased from 10.9 million in 2015-16 to 27.3 million in 2016-17, registering a growth of 150.5 percent. Banking sources told Business Recorder Monday that the performance under the key National Financial Inclusion Strategy (NFIS) indicators including BB may be discussed in the 5th Meeting of National Financial Inclusion Strategy (NFIS) Steering Committee to be held at Karachi.
According to the data, the total number of conventional and branchless banking accounts stood at 73.8 million as at end June 2017. The meeting may discuss update on National Financial Inclusion Strategy (NFIS) Implementation. The NFIS governance structure has been fully operationalised and its governance bodies have enabled advocacy, ownership and support needed for NFIS implementation from various stakeholders.
NFIS Council chaired by Finance Minister is the apex platform for advocating and securing ownership at the highest level for achieving Pakistan's financial inclusion objectives and vision. The NFIS Council has held five meetings and sixth meeting is expected to be convened in October, 2017. NFIS Steering Committee, chaired by Governor State Bank of Pakistan (SBP), has the overall responsibility of approving the action plans and monitoring the implementation of the Strategy. The Steering Committee has held four meetings.
Seven Technical Committee (TCs) have been working in focus areas for preparing implementation plans and reviewing progress for achieving the NFIS objectives Around 160 plus members have been taken onboard including ministries, government departments, regulators, associations & Networks. The Technical committee and their working groups have so far held 60 meetings and conducted focused and concrete deliberations to firm up action plans. The key performance NFIS indicators are as follows:
1. Increase formal access to at least 50 percent of adult population and 25 percent of adult female population: Branchless banking has witnessed a phenomenal growth during FY2016-17. The number of BB accounts increased from 10.9 million to 27.3 million, registering a growth of 150.5%. The total number of conventional and branchless banking accounts stood at 73.8 million as at end June 2017. Agriculture credit outreach increased by 10 percent per annum (disbursements) and 100,000 number of farmers annually: During 2016-17 the banks have disbursed Rs 704.5 billion against indicative target of Rs 700 billion with 35.6 percent growth as compared to base year's disbursement of Rs 515.9 billion. The outreach in terms of outstanding number of borrowers has also increased to 3.27 million in June 2017 from 2.18 million, thereby registering a 50 percent growth as compared to base year.
Micro credit outreach: Increase in Gross Loan Portfolio (GLP) by 15 percent annually and number of microfinance clients by 10 percent per annum: As of March 2017, micro credit outreach has increased to Rs 152.1 billion GLP from Rs 104.7 billion GLP compared to June 2016 showing an increase of 45.3 percent (YoY), whereas number of borrowers has increased to 4.8 million from 4.0 million showing an increase of 20 percent.
Increase in the proportion of SME lending to total bank credit to the private sector increased from 7 percent to 12 percent: The number of SME borrowers stood at 177.595 during 2016 as against 157.887 as of December 31, 2016 showing an increase of 12 percent on Y-o-Y basis.
Outstanding SME financing of the banks & DFIs increased from Rs 305 billion as of Dec-2015 to Rs 401 billion as of December -2016, thus showing an increase of 31 percent on Y-o-Y basis. Similarly, the share of SME financing as percentage of total bank credit to private sector increased form 8.0 percent to 8.7 percent on Y-o-Y basis.
The progress on key initiatives under NFIS included Asaan (Easy) Mobile Account (AMA) Scheme. Asaan (Easy) Mobile Account (AMA) Scheme: The NFIS Council had approved an Asaan (Easy) Mobile Account (AMA) scheme under which the digital finance service providers will join an integrated platform, allowing any person with a basic mobile phone to open a digital transaction account swiftly through a Unified Unstructured Supplementary Service Data (USSD) code or String from anywhere at any time.
The objective of the scheme is to improve accessibility of new customers for account opening, drive usage of digital financial services through increased number of account-to-account transactions across various networks and provide digital access to a range of quality financial services. This will facilitate the poor and marginalized sections of the society towards adopting digital payments and also transform banks to shift their focus from 'Over-the-Counter' (OTC) services to branchless banking (BB) accounts. The scheme will be operationalised once Third Party Service Provider (TPSP) is licensed under the TPSP regulations by PTA which is expected by October 2017.
Opening of Asaan Accounts: To enhance the outreach of basic financial services to unbanked or underserved segments of the population and achieve the targets set out in NFIS, SBP introduced the Low Risk Asaan Account" with simplified due diligence requirements minimum initial deposits (Rs 100) and monthly withdrawal limit of Rs 500,000 and overall deposit limit of Rs 500000. The initiative resulted into addition of 2.6 million accounts in the banking system as of June 30, 2017.
Rationalization of Nadra's verification Cost: After substantial concerted efforts by all the stakeholders, Nadra has reduced the verification cost to PKR 10/- to meet low cost KYC requirements for opening of Branchless Banking (BB) accounts.
Creation of Electronic Collateral Registry: The project description, initial deliberation and approval of STR Act 2016 have already been done. Currently, the legal consultant engaged by the World Bank is working on finalization of the draft rules. Besides, Ministry of Finance (MoF) is also in the process of finalizing the administrative arrangements like appointment of the registrar and allied staff location of the Registry office etc. As soon as the rules are approved by the cabinet, registrar will be appointed and other administrative arrangements implemented.
Pakistan Financial Inclusion and Infrastructure Project (FIIP): To support the implementation of Pakistan's NFIS the World Bank Group (WBG) has approved a Financial Inclusion and Infrastructure Project (FIIP) and will provide financial intermediary loan of US$137 million to government of Pakistan.
The project will focus on improving market infrastructure and institutional capacity, supporting the uptake and usage of Digital Payments and Financial Services and improving access to financial services for micro enterprises and. SMEs (MSMEs). The project will also support to substantially increase access and usage of financial services by women and support women-owned MSMEs, sources added.
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