Karachi, The steps taken by State Bank of Pakistan SBP to promote financial literacy and inclusion and capacity building of banking sector professionals will be highly useful in creating a professional, sound and vibrant financial culture in the country.
This was stated by SBP Governor Yaseen Anwar while addressing annual Chartered Financial Analyst CFA Convention & Excellence Awards ceremony organized by CFA Association of Pakistan at local hotel. “SBP looks forward to working with you and whole community to achieving our shared goals of economic growth and social prosperity.”
He said SBP has been on forefront in promoting sound corporate governance practices, fair competition in banking sector by introducing reforms and prudential regulations. SBP implemented comprehensive corporate governance regime for banks, which is supported by robust legal, regulatory framework, risk-based supervision, banking sector reforms, notably, privatization, liberalization, consolidation of banks.
“SBP measures enabled corporate governance regime for banks and its different elements are not only compatible with international best principles but also parallel with most other emerging economies. We regularly review international regulatory standards, best practices issued by Financial Stability Board FSB, Bank for International Settlements BIS, other multilateral agencies, standard setting bodies and assesses them for their possible implementation in its banking system.”
He said SBP regulatory approach to promote, strengthen corporate governance has been successful in inducing a positive change in corporate governance culture in banking sector that has transformed them into healthy, profitable financial institutions.
SBP Governor said World Bank’s country review of Pakistan based on OECD Principles on Corporate Governance rated Pakistan above average on most of principles. World Bank in survey also rated Pakistan as leader on robustness of corporate governance standards and practices in South Asia.
“One key lesson policy makers and regulators learned from recent sub-prime crisis is that among many other factors, weak corporate governance practices in leading financial institutions played crucial role in creating asset price bubble and misallocation of financial resources. As a result, policy makers in post-crisis period are placing more emphasis on improving market transparency and Corporate Disclosure.”
Anwar said current events unfolding in international economic environment are both challenging and unique. Though substantial progress was made to limit effects of financial crisis, vulnerability still persists in shape and size not imagined earlier. Few would have thought that effects of subprime crisis will question survival of Euro Currency and would threaten entire European region to fall into a severe recession.
“We have largely been successful in mitigating effects of exogenous shocks and contagion risks of international crisis. But we still face challenges of our own, ensuring conservative, prudent policies, should enable us to remain resilient from exogenous shocks. For efficient, well functioning markets, responsible and ethical behavior of participants is pre-requisite, apart from enabling environment, proper infrastructure, skills. Similarly, domestically it behooves us to upgrade corporate governance practices at all institutions to strengthen pace of economic recovery, make environment more challenging and productive for corporate and private institutions.”
He said first ever Nationwide Financial Literacy Program NFLP recently launched by SBP with collaboration of multilateral agencies is expected to impart financial knowledge covering basic concepts – budgeting, savings, investments, debt management, financial products, branchless banking among masses.
He said branchless banking regulatory framework in Pakistan has been ranked number one by Economist magazine. Fast growing network of Branchless Banking agents has now reached over 26,000 as of March 31, 2012 and total volume of transactions increased to 25.3 million (up 23%). Deposits grew by 18% to Rs 594 million. This fits well into Financial Inclusion strategy.