February 25, 2025 (MLN): The need to significantly increase financial deepening in Pakistan was reiterated by the Governor of the State Bank of Pakistan, Mr. Jameel Ahmad.Speaking at the Pakistan Banking Summit 2025, he emphasized that no country can achieve sustainable economic growth with low levels of private credit.He urged banks to rethink their current business model, reassess their priorities, and play a more active role in financial intermediation, according to the press release issued by the Central Bank.Mr. Ahmad highlighted SBP’s Strategic Vision 2028, which primarily focuses on promoting inclusive and sustainable access to financial services, building an innovative and inclusive digital financial ecosystem, and enhancing efficiency, effectiveness, fairness, and stability of the financial system.He stressed that the explicit inclusion of financial inclusion as one of SBP’s core functions in the amended SBP Act underscores its importance.Highlighting significant progress in financial inclusion over the past decade, he noted that bank account coverage has increased to nearly 64% of the adult population from 47% in 2018, while the gender gap has narrowed from 47% to 34%.Referring to the latest National Financial Inclusion Strategy 2024-2028, he outlined the central bank’s target of increasing bank account coverage to 75% of the adult population and reducing the gender gap to 25% by 2028.To achieve these ambitious goals, he emphasized the need to enhance the depth, breadth, and quality of financial services, particularly for low-income individuals, the microfinance sector, SMEs, and agriculture.While appreciating the role of the banking and financial system in Pakistan’s economic development, Mr. Ahmad noted that a significant increase in the depth and breadth of the financial sector is essential for achieving more inclusive and sustainable economic growth.He pointed out that the composition of banks’ lending portfolios in Pakistan is highly skewed towards established corporates at around 74%, with only 5% allocated to SMEs.He called on the banking industry to reassess its business strategy to focus on mobilizing deposits and increasing credit to the private sector, particularly SMEs and the agriculture sector.Governor SBP urged the banking industry to leverage artificial intelligence and alternative data sources such as cellular and satellite data to provide cost-effective alternative delivery channels, enhancing access, usage, and quality of financial services, especially for SMEs, agriculture, and women.He stressed the urgency of working on a "war footing" to help businesses digitize their payments by providing digital transactional access through secure portals.Additionally, he called on financial institutions to improve their ability to assess the impact of climate change across credit, market, liquidity, and operational risks.Recognizing the crucial role of businesses and academia in addressing sustainability challenges, he underscored the need for research, policy recommendations, and fostering collaborations.Expressing optimism, Mr. Ahmad hoped that the participants of the Pakistan Banking Summit would engage in meaningful discussions and idea sharing, serving as a foundation for policies and initiatives that can drive Pakistan toward a more sustainable and equitable future.Copyright Mettis Link NewsPosted on: 2025-02-25T19:59:20+05:00The post Pakistan needs deeper financial reforms: SBP Governor appeared first on Mettis Global Link.