IN the last few years, the State Bank has taken some important initiatives to reduce the large-scale financial exclusion in the country. It recently directed commercial banks to address women’s exclusion by helping them access banking services. Now it has launched the Asaan Mobile Account initiative, which, given its ease of use, is expected by the bank to give nearly 50m unbanked low-income Pakistanis access to banking services through their mobile phones. The initiative will allow people, who don’t even have internet connectivity, to open accounts with 13 banks by dialling a code. There is a potential market of around 81m mobile subscribers who don’t have access to the internet and could become users of AMA “if provided with the right value proposition”, according to the State Bank governor. The AMA would especially help women access formal financial services by overcoming mobility, cultural and documentation barriers. Besides, it will help the government reach out to and disburse cash among 15m beneficiaries of the Ehsaas Programme. Indeed, the initiative is a welcome push for prioritising the financial inclusion of millions of unbanked Pakistanis.

Financial exclusion is a major issue in Pakistan, which remains a cash economy with trillions in hard currency still in circulation outside the formal financial system. For a long time, the government and the central bank have been struggling to increase financial inclusion. But neither has so far proved very effective. For the right or wrong reasons, financial inclusion has become synonymous with the opening of a bank account. The policy focus on ‘ease of opening bank accounts’ is a major factor. This approach can produce only a limited impact. Luckily, digital technology has provided us with a platform to rapidly reduce the ratio of the financially excluded population by linking people with formal financial services. Yet the dream of greater financial inclusion cannot be realised unless the economically disadvantaged segments of society are linked to easy-to-use credit services as shown by the success of microfinance banking in the country.

Published in Dawn, December 16th, 2021