network of microfinance has arisen overwhelmingly from agents and mobile phone channels. recent international researches 1 and studies prove that increase in mobile penetration in developing countries is correlated with economic growth. when this technology is used to expand financial services, the benefits that accrue are : increase in savings due to incremental small savers, access to information improves, costs and time spent on traveling reduces, new employment opportunities emerge, cost and savings to financial institutions, and creation of a platform on which other businesses can also grow. ladies & gentlemen, branchless banking is moving at a phenomenal pace in pakistan, and it should be our endeavor to achieve maximum benefits from these developments. encouragingly, market environment for branchless banking is widely considered globally as one of the best. sbp has been promoting innovations in products and delivery channels through policy and regulatory measures and market interventions. sbp has put in place a “ financial innovation challenge fund ” under the dfid - funded financial inclusion program ( fip ). i am glad to highlight that market has been responding actively to this stimulus. as a result, users ’ adoption has started rising at an increasing rate, and is likely to change the landscape of retail banking in pakistan in near future. this dynamic transition is endorsed by recent branchless banking data, with a transactional volume of nearly 32 million valuing ( a ) waverman, l., m. meschi, and m. fuss.. “ the impact of telecoms on economic growth in developing countries. ” vodafone policy paper series 2 ( march ). http : / / info. worldbank. org / etools / docs / library / 152872 / vodafone % 20 survey. pdf. ( b ) qiang c., and c. rossotto. 2009. “ economic impacts of broadband. ” in information and communication for development report : extending reach and increasing impact, ch. 3. washington, dc : world bank. www. worldbank. org / ic4d. bis central bankers ’ speeches rs. 140 billion during the single quarter of july – september, 2012 by only two players. these players have registered more than 1. 8 mobile - wallet accounts largely of those people who have previously been un - banked and under - banked. mobile banking is also facilitating repayment of microfinance loans and we are seeing increasing number of partnerships between microfinance institutions ( mfis ) and branch

in urban and rural areas. awareness is growing that access to a wider set of financial services provides poor people with capacity to increase or stabilize their income, build assets and have much greater resilience to economic shocks. appropriate and affordable savings products, payment and money transfer services ( both domestic and international ) as well as insurance are all important. gender discrimination has excluded women who have toiled to provide and support financial needs through enterprising means but were stymied due to negligible access from the formal financial sector. bis central bankers ’ speeches at the same time, one billion people with mobile phones in the world do not even have a basic bank account. as the costs of information and communications technology shrink, the time is ripe to extend this technology to address financial exclusion. technological innovation impacts the cost and access equation – making it economically viable for financial service providers, to reach poor people, with a wider range of products and services. innovation also extends to new institutional approaches. increasing numbers of countries with large unbanked populations are pioneering policy and regulatory innovations that opens space for “ banking beyond branches ” with new approach to the delivery of formal financial services. this is allowing previously excluded customers the much needed access to an increasing range of basic financial services. pakistan has one of the lowest financial penetration levels in the world with 56 % of the adult population totally excluded, and another 32 % informally served. we are a country with a population of 180 million living in geographically diverse areas. mobile phone subscription has seen explosive growth in pakistan. in contrast, banking accounts are owned by approximately 30 million customers largely belonging to high income segments of the society. with a network of a little over 10, 500 bank branches, the coverage of branches is one of the lowest in the region. developing brick and mortar branches is a costly proposition. to encourage financial institutions to develop alternative delivery channels, sbp in 2008, introduced branchless banking ( bb ) regulations. the regulations are applicable to all commercial banks, islamic banks and microfinance banks in pakistan. these regulations have actually catalyzed in the deployment of a number of branchless banking initiatives that have a dual advantages : first, there is an enormous scope for expanding outreach, especially in the hard - to - reach rural areas. the emerging models relying on “ banking agents ” have greatly extended the distribution of financial services to the marginalized and deprived segments. second, alternative delivery channels promise significant cost reduction to institutions. due to these benefits, the expansion in the retail