( v ) finally, within regional context pakistan ’ s financial system despite its growth is still small. for instance, the financial system of other asian emerging financial market countries twice or three times larger in relative terms and the gulf states have now geared themselves into regional financial hubs. keeping in view these considerations, the state bank of pakistan ’ s ( sbp ) is now launching a ten year financial sector strategy. this strategy has been developed based on ( i ) a comprehensive assessment and evaluation of the banking system that helps draw key lessons ; ( ii ) pakistan ’ s forward looking economic development strategy and vision ; and ( iii ) learning from the emerging changes in global and regional financial architecture and financial advancement and innovation. this paper aims to capture the objectives and broad elements of the financial sector strategy which will be finalized and adopted by the third quarter of the 2008 after consultation with stakeholders. the scope of the paper is confined principally to reforms of banking sector and regulatory architecture which would require some principal changes or new legislation. the objective of the financial sector strategy will be to broaden and deepen the financial system to help pakistan : ( i ) achieve higher and sustainable economic growth, ( ii ) develop a dynamic, robust and stronger system, ( iii ) mobilize the domestic and foreign resources for private investment ( which has to be the key driver of the economy ), and ( iv ) deepen financial penetration for poor and underserved regions. prerequisite for financial sector growth is, however, macroeconomic and political stability and augmentation of the enabling policy environment in the real sector. assuming these preconditions are restored, the ten year strategy will ( i ) stimulate growth in financial assets to 165 % of gdp, growth in deposit base by 13 % to reach $ 217 billion, and advances to allow private sector credit / gdp ratio to rise from 27 % to 42 % ; ( ii ) be financially inclusive supporting the small savers and meeting the requirements of small borrowers in agriculture, housing, small and medium enterprises ( sme ) and microfinance sectors by raising financial penetration ratio through enabling policy environment and outreach expansion ( coverage of per bank branch to improve from 19, 000 to 15, 000 persons ). ( iii ) developing financial infrastructure and automation to enhance the coverage of automated teller machines ( atms ) to 10, 000 ; and ( iv ) reduce the systemic risks of the financial system by developing an adequate safety net for the small depositors and the central bank ’ s

measures and incentives that will result in more company ratings. that would also help facilitate private listings of private debt securities. d ) land and property registries : land and property titles are available in urban but not in rural areas. improved land titling systems in rural areas could be seen as a necessary underpinning for an improved credit extension process, by allowing collateralized lending for the agriculture, sme and housing sectors. security of title is essential. sbp is exploring ways to facilitate pilot studies and efforts to develop off the shelf systems and make it affordable for local and provincial governments to introduce new registries and systems over the medium term. e ) the judicial system : an efficient financial system requires legal certainty and enforceability of contracts. the present court system needs to be further equipped to deal with financial transactions and disputes. this would require a long - term program to train judges in commercial and financial law and perhaps to establish more specialized courts to deal with financial matters. conclusion drawing up the financial sector strategy for next ten years the paper has outlined the vision, objectives and strategy for financial sector. this paper concentrates largely on reforms of banking sector and central bank – essentially focusing on its role as regulator. driving this reform is the country ’ s overall development program which being ambitious requires resources for both the public and private sector. pakistan ’ s financial markets need to grow at a faster pace to not only meet the domestic requirements but to be able to position itself to receive the foreign inflows that will be critical to meeting our infrastructure and industry financing requirements. financial sector broadening and deepening is critical to ensure the profitability and sustainability of banks, while ensuring that our citizens have access to development finance to change their lives. it is essential to structure and put in place financial safety nets with supportive legislation on a timely basis for banking sector to grow in a sound and efficient manner, while managing properly its systemic risks. empowering and gearing the primary regulator will be key to keeping on track and effectively implementing the reform agenda. in conclusion it is important to highlight that besides banking sector reforms, the broadening and deepening of financial markets requires equal emphasis on development of securities and debt markets along with the insurance and pension reforms which have lagged behind the banking sector reforms. adhering to macroeconomic stability and developing an enabling environment for real sector, both at the federal and provincial level, and a functioning judicial system would be key to keeping the necessary momentum for financial sector reforms.