demand - side dimension to financial inclusion strategies. therefore, financial literacy can be a very effective tool to tackle the psychological, emotional and cultural barriers that prevent people from being financially included. many poor and non - poor people do not have a bank account and very few of them understand why this puts them at a disadvantage when it comes to their personal financial management. according to pakistan access to finance survey ( a2fs ), only 12 percent of the population has access to formal financial services. whereas of the remaining 88 percent, only 32 percent are informally served and 56 percent are completely excluded. moreover, according to the a2fs analysis, about 40 percent of the financially excluded population reported lack of understanding of financial products as the main reason for financial bis central bankers ’ speeches exclusion. this clearly identifies the need for financial education as a systemic area to be addressed to tackle financial exclusion in a big way. allow me to very briefly share the various conventional and non - conventional measures adopted by sbp to boost financial inclusion : sbp introduced basic banking account ( bba ), a simplified financial product for low income consumers. bba aims to reduce costs for consumers by removing more expensive facilities and requires no minimum balance, and neither does it have complex terms and conditions thereby reducing administrative and management costs. sbp introduced microfinance banking regulations in 2001 to specifically meet the demands of low income consumers. these regulations have been improved to a world class microfinance regulatory framework, ranked number one for the last two years in a row by “ the economic intelligence unit ” of uk ’ s “ the economist ” magazine. sbp has adopted innovative solutions to overcome geographical barriers, including branchless banking through retail agents and harnessing technology via mobile - phone banking. the branchless banking regulations were introduced in 2008, clearing the way for development of branchless and mobile phone banking services in pakistan. the retail network of banks has overwhelmingly multiplied due to agents and mobile phone channels. in less than three years, there are now 18, 000 branchless banking outlets, augmenting and surpassing the 10, 000 + conventional bank branches. in addition to these policy and regulatory measures, sbp has been managing various market interventions funded by donors including gop, ukaid, and adb. i would like to especially thank adb and ukaid for actively supporting financial inclusion in pakistan. under the programs sponsored by these donors, a number of market interventions are managed by sbp including : the institutional strengthening fund ( isf ) providing grant funding

to microfinance ( mf ) providers to top and middle tier microfinance banks ( mfbs ) and microfinance institutions ( mfis ) for key investments in hr, it, product development, risk management systems, business plans and branchless banking development. the microfinance credit guarantee facility to link microfinance with financial markets for mobilization of wholesale commercial funding through partial guarantees. similarly, the financial innovation challenge fund ( ficf ) for grants to innovative projects and testing new markets to lower cost of delivery, enable systems and procedures to be more efficient and provide new ways of meeting the larger demand for financial services. and the improving access to financial services fund which is supporting today ’ s program. these are mostly supply side interventions aiming to increase financial services by removing bottlenecks and have raised financial inclusion to a certain extent. however, what has been missing is a demand side solution – a program to impart financial education and awareness to consumers. this recognises that the very low level of financial awareness and confidence of financially excluded groups remains a strong barrier to their access and use of financial services. in addition, there are risks involved in creating new opportunities for consumers if the consumers are not proficient at making financial decisions. therefore, going forward, sbp considers financial literacy as an integral part of the financial inclusion strategy. financial literacy has assumed greater importance in recent years for both developed and developing countries, therefore, best practices in this area are still evolving. however, synthesizing from the oecd ’ s high level principles for financial education, some best practices are : first, the financial education program must involve key players from the beginning. this may take a lot of time and effort due to slow decision making process but will ensure success of the program in the long - run. in particular, the consumers must be consulted to understand bis central bankers ’ speeches their preferences and identify appropriate curriculum and dissemination channels and tools. therefore, financial education surveys must be conducted to appropriately identify the needs and to set a baseline for program monitoring. this will also help identify teachable moments for low income groups that may typically occur around the receipt of money, the need for credit etc. second, it is better to implement and earn quick wins to generate positive energy such as starting from a pilot launch initially before going national to gain the buy - in of all the stakeholders. third, the program design should be flexible enough to enable diverse stakeholders to join - in and create synergies. this