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Banking on Equality

SBP’s New Policy for Financial Inclusion of Women

On September 17, the State Bank of Pakistan (SBP) launched a special policy based on gender diversity to transform the banking sector in the adoption of women-friendly business policies and practices. According to SBP, this policy, named ‘Banking on Equality: Reducing the Gender Gap in Financial Inclusion’, will help remove the barriers to women’s access to banking and financial services. The policy is aimed at diminishing the yawning gap between what bears semblance of civilization, where men and women don’t anymore quibble over basic and established human rights debate and the gloomy state in the country where hardly 14.5 million women have bank accounts out of over 100 million of them head-counted, according to last official census.
In his address to the ceremony, President Dr Arif Alvi, who launched this policy, said that with the changing dynamics of the society marking minimizing needs of physical labour, the women could easily play their role in the society by using internet and other digital tools. With the five pillars of diversity, inclusion, accessibility, transparency and leadership, the policy has set target of around 20 million women having bank accounts by 2023. Currently, only 13% of the bank staff and 1% of branchless banking agents are women. Under the policy, the financial institutions would be asked to ensure minimum 20% female participation in workforce by 2024. He added that a secure environment was inevitable for the women to make them play a productive role as the security of their children was always family’s top priority.
The President also suggested that the number of women bank accounts could have a quantum jump if Ehsaas disbursements to all 17 million women were switched through banking channel instead of cash. It will also ensure women’s enhanced control over the money.
Sharing his thoughts on women’s financial inclusion, SBP Governor, Dr Reza Baqir, said that “it is the right of a human being as far as financial inclusion is concerned.” Comparing the statistics regarding the percentage of adult women having bank accounts in different Muslim countries, he said that the figure stands at 70% in Saudi Arabia, 76% in UAE, 54% in Turkey, 92% in Iran and 82% in Malaysia.
Dr Baqir added that advancements in branchless banking have played a significant role in improving access to finance for people from various socioeconomic backgrounds, without the added cost of setting up brick and mortar structures. As a result, as of December 2020, 62% of adults have a bank account, showing a significant growth from 45% in 2017. Under the National Financial Inclusion Strategy (NFIS), a target was set to ensure that at least 20 million women must have active bank account by 2023.
In the words of SBP’s Deputy Governor, Sima Kamil, while progress has been made, the general gap is sadly growing, rather than narrowing. Sharing some figures, she said that in January 2020, 29% of adult women in Pakistan had bank accounts compared to 81% men. In December 2020, 33% of women had bank accounts while the percentage of men grew over 90%, so the gap is growing and we have an issue and it is a problem. She said that as per the central bank research the reason is not that women do not want to open bank accounts. “Looking at our research, both domestic and international, what we have concluded is that being gender-neutral is simply not enough,” she added.
Targets of the policy
ü Improving gender diversity by ensuring 20 percent of employees in all SBP-regulated financial institutions are women;
ü Introducing women-centric products and services in the banks;
ü Every bank branch needs to have women desks by 2024;
ü Collecting gender-disaggregated data, particularly to build on how women are doing in finance sector and to set more targets;
ü Setting up a Policy Forum on Gender at the central bank.
Pillars
As per the official document, there are five key pillars of the said program — gender diversity in financial institutions and access points, i.e. branches, call centres, etc. to encourage women towards formal financial services; women-centric products that cater to women’s financial needs specifically while increasing financial literacy and awareness about women-centric product offerings; women’s champions and specialised resources at all customer touch points for better customer experience; robust collection of gender-disaggregated data and target setting for informed policy interventions and post-launch monitoring and evaluation; policy forum on gender and finance to prioritise women’s financial inclusion, drive the agenda forward, and increase buy-in from multiple stakeholders for added momentum.
As per the SBP’s document, “The proposed policy identifies five key pillars under which actions are targeted towards improving institutional diversity, product diversification and development capability, customer acquisition and facilitation approaches towards women segments, collection of gender dis-aggregated data, and prioritizing gender focus in SBP’s policies. The policy recommendations will be applicable on SBP’s regulated entities including Commercial Banks, Islamic Banks, Microfinance Banks (MFBs), Development Finance Institutions (DFIs) and Electronic Money Institutions (EMIs), etc. Furthermore, Securities and Exchange Commission of Pakistan (SECP) is expected to adopt a similar, yet customized, gender policy for the non-banking financial sector.”
The key features of the policy are as follows:
1. Improving Gender Diversity
A financial institution cannot adequately address the female market segment without addressing its internal gender imbalance. Currently, only 13% of the staff of banks and 1% of branchless banking agents are women. More women working in leadership positions at financial institutions can also aid the development of policies and practices for improving gender balance across the financial sector as well as developing women-friendly products and services. Presence of women champions and specialized resources at all customer touch points, such as bank branches, branchless banking agents, call centres and alternate delivery channels, can aid women’s adoption of conventional and digital financial services. Financial Institutions (FIs) shall be asked to develop policies to improve gender diversity and ensure minimum 20% female participation in the workforce by 2024. They will create a new management sub-committee on gender, or amend existing management committee’s KPIs to include focus on gender. The FI’s will also adopt gender diversity targets and KPIs for all C-suite executives, and improve women’s representation within senior management from current 6%. Specific targets for women’s presence in decision-making senior management/regional management positions, shall also be set, while it must be ensured that anti-harassment policies and reporting framework, and women-friendly policies and practices are in place at banks. Lastly, although it is an SECP requirement for all institutions to have at least one woman on their board, there are gaps in its compliance. Therefore, the policy will re-iterate financial institutions to increase the number of women in their board of directors.
2. Women-centric Products and Outreach Targets
To shift from gender-neutral to gender-inclusive product design, it is imperative that a dedicated team works on gender-segmented product designing and creates a business case, while understanding the existing social norms, and marketing products effectively. Therefore, FIs shall create a specialized department within 6 months of issuance of this policy, to apply gender lens on existing and new products and services offerings, keeping in view various use cases within women demographics of all ages and life cycle stages. FIs will be assigned outreach targets for savings and credit products to enhance access, usage and quality of financial services to women. In order to meet these targets, FIs will collaborate with various women civil society organizations, chambers of commerce and trade bodies to reach out, provide hand-holding and non-financial advisory services to the market, and assist aspiring women entrepreneurs to access credit products and services. Further, FIs will seek opportunities for collaboration with Ehsaas program to graduate beneficiaries from social cash transfers to value-added products and services, and statutory bodies such as ECP and NADRA to create opportunities for raising awareness and facilitate bank account opening. Further, all FI websites and apps will have a tab/section for “Women Financial Services” to direct potential customers towards availing products catered to their needs and must collaborate with Fintechs, Incubation Centres and Accelerators for development of digital access tools and creating digital awareness and marketing for banking products and services.
3. Women Champions at All Customer Touch Points
Women’s financial inclusion cannot be improved without understanding their needs with careful attention. However, women customers, especially entrepreneurs, feel intimidated to visit a bank branch as they are not facilitated effectively. Therefore, to enable banks to improve facilitation of women customers and entrepreneurs, women champions shall be deployed at all customer touch points. The women champions must undergo gender-sensitivity training, and should be well versed with the bank’s products along with government and SBP’s schemes for women entrepreneurs. They should proactively guide the women entrepreneurs to get access to credit. Further, all other virtual touch points of the banks, including call centres, apps and alternate delivery channels should aim to be more women-friendly. The resources at physical and virtual touch points will also serve as a main contact point for non-financial advisory services and complaint redressal. By 2024, the resources should be deployed on at least 75% of all touch points.
4. Robust Collection of Gender-Disaggregated Data and Target Setting
The absence of data and targets can dilute FIs focus on gender in finance, and impede development of informed policies and associated actions for closing the gender gap. Therefore, under the policy, all institutions under SBP’s ambit will be instructed to collect and report gender dis-aggregated data related to gender dis-aggregated outreach of products and services, to SBP. The data collection will also help FIs to recognize the opportunities and challenges in women’s financial inclusion, and help them in developing internal policies to comply with SBP’s gender policy and targets. Furthermore, SBP will also strengthen its own research on gender and develop tools in line with international best practices for impact assessment.

5. Policy Forum on Gender & Finance
To discuss opportunities and challenges in women’s financial inclusion, internalize gender mainstreaming within organizations, and review the existing legal and policy framework for identification of bottlenecks in women’s financial inclusion, a Policy Forum on Gender and Finance will be established at SBP. The forum will be chaired by Governor SBP and will include members from Banks, DFIs, MFBs, SECP, women chambers of commerce, civil society, private sector, gender leaders, etc. while it will meet at least bi-annually to serve as apex forum for future policy formulation on gender. The forum will also create space for innovations that support greater women’s financial inclusion. Going forward, under the forum, SBP will host annual conferences for knowledge-sharing, plenary discussions on gender and finance, and give awards to those banks which have made significant efforts to close the gender gap in finance.
SBP is aware that closing the gender gap is challenging since the root causes go beyond access, and centre on powerful social norms. Nonetheless, gender-blind practices will continue to perpetuate the gaps, despite advancement in technology, innovations and business models. Therefore, with the implementation of the proposed policy, financial institutions shall adopt a holistic and mindful incorporation of gender perspectives in their policies, with the aim to advance women’s financial inclusion in Pakistan. In parallel to the gender mainstreaming policy implemented on the financial sector, SBP is also working on adopting better gender diversity policies to hire, retain and promote more women in the organizations.
Analysis
The first of its kind mainstreaming effort for the financial sector, which introduces a gender lens in our banking practices, is creditable. The policy aims to boost the number of active women-transaction bank accounts from the existing 14.5 million to around 20 million by 2023 and increase female participation in the workforce of financial institutions from 13 percent to 20 percent by 2024. In the given circumstances, the targets seem ambitious. But these are achievable with a little bit of push from the central bank and increased use of technology.
Improved gender diversity in financial institutions, creation of women desks at bank branches to facilitate female clients and the development of women-centric products and services as envisaged in the policy should largely take care of supply-side barriers. The collection of gender-disaggregated data and institutionalisation of a policy forum on gender at the State Bank can push banks to meet policy targets. The recent extension of the facility to open bank accounts digitally to resident Pakistanis should help boost the financial inclusion of women. It is not clear if these initiatives have done away with any condition for the ‘validation’ of a male family member for an adult woman to become part of the banking system. If it hasn’t, it should be dismantled immediately.
Currently, women are disproportionately under-served by the country’s banking system. Reports show that women can be forced to move towards informal means to meet their borrowing and savings needs. A State Bank survey showed only 5 percent women savers used formal channels in 2015 and the Pakistan Microfinance Review 2019 put the total number of female borrowers at just 3.8 million. Little wonder then that the World Bank in a 2018 report strongly underscored the importance of always keeping women at the centre of financial inclusion since their access to a secure and private means of savings and financing is closely linked to their social empowerment and enables them to contribute positively to economic growth, and creates opportunities for them. Thus, President Arif Alvi was spot on when he said that opening bank accounts for women was just one way of financial inclusion. It would open up avenues for them to access credit, payments, insurance and other financial services at an affordable price. Bridging the gender gap in financial inclusion will be challenging since the causes go beyond access to services and are rooted in social values and norms. Nonetheless, the shift from gender-blind and gender-neutral practices to women-specific efforts envisaged by the new State Bank policy should go a long way in empowering them economically.

The writer is a Lahore-based educator.