The State Bank of Pakistan has highlighted the measures and initiatives taken by its former Governor, Dr. Reza Baqir, who recently completed his three-year term.
The central bank paid tribute to Dr. Baqir on completing his term as Governor and for his leadership in introducing the initiatives taken during this period.
— SBP (@StateBank_Pak) May 5, 2022
Since his appointment at SBP on 4 May 2019, various initiatives were taken under his supervision. Several initiatives started before his tenure also continued under his direction. Some of the prominent initiatives during his term include:
Launch of Raast Payment
The central bank launched the country’s first real-time and secure electronic payment system for large P2P and P2B payments. So far, eight million Raast ID’s have been created, with two million transactions worth Rs. 21 billion conducted through the service.
E-Banking saw tremendous growth during this period. In 2021, there was a 45 percent increase in the number of transactions with a 40 percent increase in the value of transactions. In 2021, mobile banking users rose to 12 million, while internet banking users also surpassed 7 million. The number of e-Commerce merchants stood at 3,968, while the number of PoS machines increased to 92,153.
Digital onboarding framework for customers
This measure required banks to facilitate customers to digitally open bank accounts, which significantly increase accessibility, especially for female customers.
Licensing and regulatory framework for Digital Banks
The central bank announced the landmark regulatory instructions on licensing and regulatory framework for digital banks in Pakistan in January 2022, which provided a forward-looking outlook to the banking landscape of the country.
Promotion of Agriculture Credit
SBP took a number of initiatives for the promotion of agriculture credit, which included the Champion Bank concept, the agriculture credit scoring model, and the electronic warehouse receipt financing. Moreover, during FY21, the agriculture credit disbursement stood at Rs. 1,366 billion, and during the first nine months of the FY22, disbursements stood at Rs. 958 billion.
Assets and deposits of the Islamic Banking Industry reached new peaks during CY21. There was an increase of Rs. 1,307 billion in the Islamic Assets, while the increase in Islamic Deposits stood at Rs. 822 billion in CY21.
The Islamic Banking Industry also played a significant role in the implementation of various SBP Initiatives like Temporary Economic Refinance Facility (TERF), Export Refinance Facility (ERF), Mera Pakistan Mera Ghar (MPMG), and Naya Pakistan Certificates (NPCs) under Roshan Digital Accounts (RDA).
The share of Islamic Bank in TERF, ERF, NPCs, and MPMG stood at 38 percent, 31 percent, 46 percent, and 49 percent, respectively.
Currently, there are five full-fledged Islamic Banks in Pakistan with 17 conventional banks having Islamic branches. The share of Islamic branches in the overall branch network stands at 25 percent with 3,956 branches. The market share of Islamic banks in terms of assets stands at 18.5 percent, while in terms of deposits the share stands at 19.4 percent.
COVID-19 Support Measures
The central bank took several COVID-19 support measures when the coronavirus pandemic hit the country. The SBP reduced the policy rate by 625 basis points in a short period. It introduced a principal loan extension program to ease the cash constraints of borrowers, benefitting 1.8 million borrowers. It provided relief for loan restructuring to borrowers to combat economic disruptions.
SBP also introduced a Rozgar scheme to prevent layoffs by financing wages and salaries of employees, 1.7 million jobs were protected as a result. The central bank also introduced a refinance facility for new industrial investments and hospitals. 70 percent of the loans under TERF were of less than Rs. 500 million, while 50 hospitals also benefited from the refinance facility. The combined value of these measures stood at Rs. 2,073 billion.
Roshan Digital Accounts
Roshan Digital Accounts (RDA) were introduced in September 2020 for overseas Pakistanis. Under the scheme, overseas Pakistanis can open bank accounts in Pakistan digitally without the need to visit any bank branch. The RDA scheme started with eight banks and has since expanded to 14 banks. A total of 395,910 accounts have been created under the scheme generating funds worth $4.06 billion.
Banking on Equality
The Banking on Equality guidelines, launched in September 2021, is a landmark framework focused on reducing the gender gap in financial inclusion by bringing a shift toward women-friendly business practices in the financial sector.
Mera Pakistan Mera Ghar Scheme
Under the Mera Pakistan Mera Ghar Scheme (MPMG) the number of applications by borrowers to avail of housing financing increased manifolds, and banks also increased the pace of approvals and disbursements. The number of applications increased by seven times year-on-year in April 2022. Approvals also witnessed an 11 times increase during the said period while disburses jumped from Rs. 1 billion in April 2021 to Rs. 66 billion in April 2022.
The overall housing and construction finance also witnessed strong growth, with banks almost doubling their housing and construction finance portfolio and meeting the target of Rs. 405 billion by March 2022.