supply side that constrain the sme ’ s access to finance and other banking products and services. on the demand side, these issues can be tackled through a more systematic documentation and disclosure of information by smes and better business planning. on the supply side, bankers ’ reluctance to lend to smes can be addressed through innovative credit assessment tools and techniques like credit scoring and better capacity building efforts for the financial service providers. among various stakeholders that have to play their role for sme development, i think, state bank of pakistan and commercial banks both need to play a proactive role in improving access to finance for smes. as far as sbp is concerned, it has taken a number of important initiatives for improving access to credit for sme sector. these measures include a provision of specialized prudential regulations ( prs ) for smes, refinance schemes for smes, credit guarantee scheme for small and rural enterprises and cluster development surveys. further, sbp has been assisting banks through a holistic ifc technical assistance and capacity building initiative encompassing areas of strategy formulation, product bis central bankers ’ speeches development, risk management and hr development etc. for sme lending. presently, bank alfalah ltd. is being supported for capacity building to boost sme banking, while many other mid - tier banks are being considered for similar ifc technical assistance. ifc is in direct dialogue with a number of banks. we hope that this project will revitalize sme lending by participating financial institutions and will be a prototype for other financial institutions which could see financing to smes as profitable business ventures. aside from the boost sme provides to employment and overall growth to the economy, it also provides diversification to a bank ’ s balance sheet and in turn a stable revenue stream to support long term shareholder value. given the huge potential for this sector, i encourage all the commercial banks to review their sme strategies and assume a greater role in sme lending. ultimately it has to be the private sector which has to take the lead role in lending to the sme sector given their critical positioning and greater capacity in terms of their outreach and availability of funds. as i earlier mentioned, the actual statistics for lending to smes have not been encouraging in recent years. banks ’ credit to smes has declined over the last 4 years from rs 437 billion in 2007 to rs 248 billion in june, 2012. although, this decline can be partly attributed to adverse economic conditions during the period and

kazi abdul muktadir : financial inclusion, consumer awareness and protection keynote address by mr kazi abdul muktadir, deputy governor of the state bank of pakistan, at 4th the conference on financial services and consumers, karachi, 31 january 2013. * * * mr. kaukab iqbal, chairman, consumers association of pakistan, distinguished speakers, ladies and gentlemen – assalam o allaikum wa rahmatullah! first of all, i would like to thank the consumers association of pakistan ( cpa ) for inviting me to address this forum on the increasingly important issue of financial inclusion and consumer awareness and protection. i congratulate the organizers for holding this pertinent event which has gained special prominence in the aftermath of global financial crisis. i sincerely hope that the today ’ s proceedings would give further impetus to our efforts in promoting an inclusive and responsible financial sector in the country, thereby enhancing the financial sector ’ s stability and viability in the long - run. ladies and gentlemen! the importance of financial services in the development of any economy cannot be overemphasized as it promotes entrepreneurship, generates employment, fosters innovation, reduces poverty levels and enhances social equality. therefore, sbp, as part of its financial sector development strategy is actively promoting financial inclusion. financial inclusion refers to the process of promoting affordable, timely and adequate access to a wide range of regulated financial products and services and broadening their use by all segments of society through the implementation of tailored and innovative approaches including financial awareness and education with a view to promote financial well - being as well as economic and social inclusion. to add further emphasis and urgency to the issue of financial inclusion, i would like to share that financial sector in pakistan remains restricted in its outreach as the majority of population remains either excluded or informally served. this limited access is reflected in the total number of bank accounts, presently around 32 million, and the total number of borrowers, which is only 5. 7 million. this high level of financial exclusion is largely attributed to two major factors. firstly, on the supply side, there is lack of appropriate product offering by financial service providers primarily influenced by their typical hesitance towards the informal and low income segments of the population and lack of geographic presence. secondly, on the demand side, there is lack of public awareness about availability of financial services and products. sbp is cognizant of high financial exclusion in the country and is fully committed to tackling the associated challenges