FM calls for innovative solutions to enhance financial inclusion

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MG News | January 15, 2025 at 07:25 PM GMT+05:00

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January 15, 2025 (MLN): To enhance access to financial services, particularly for rural and underserved populations, there is a need for innovative solutions.

This was stated by Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, during a meeting with the leadership of the Pakistan Microfinance Investment Company (PMIC), according to the press release issued today.

He encouraged PMIC to propose funding mechanisms such as equity endowment funds and targeted government-mandated allocations to increase the financial sector’s capacity and outreach.

He reiterated the government’s commitment to accelerating financial inclusion as a cornerstone of sustainable economic development.

During the meeting, the PMIC team presented a detailed overview of the microfinance landscape, highlighting key challenges and opportunities.

It was noted that Pakistan significantly lags behind regional counterparts, such as Bangladesh, India, and the Philippines, in terms of financial inclusion, with a potential microcredit market of 41 million, of which only 7.4mn clients are currently served.

The discussion included a comparative analysis of Microfinance Institutions (MFIs) and Microfinance Banks (MFBs).

 The team highlighted that while MFBs primarily lend against gold and offer nano loans, MFIs focus on rural communities and cater to underserved segments, particularly women.

Several key challenges to financial inclusion were outlined, including:

  • MFIs and MFBs operate under separate regulations, complicating the ecosystem.
  • Substantial liquidity is required to expand outreach, but funding remains a challenge.
  • The limited number of entities in the sector hinders widespread financial access.
  • Proactive oversight is needed to meet the ambitious targets of the newly drafted NFIS 2024-28.

The finance minister appreciated the insights shared and stressed the importance of addressing these challenges with realistic and practical solutions.

PMIC, established in 2016 under the National Financial Inclusion Strategy (NFIS), operates as a wholesale microfinance apex with the aim of enhancing financial inclusion across Pakistan.

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