SBP steps for sound, vibrant financial culture in the country

KARACHI, July 6 (APP): The steps taken by the State Bank of
Pakistan (SBP) to promote financial literacy and inclusion and
capacity building of the banking sector professionals will be highly
useful in creating a professional, sound and vibrant financial culture
in the country.
This was stated by SBP Governor, Yaseen Anwar while addressing
the annual Chartered Financial Analyst (CFA) Convention & Excellence
Awards ceremony which was organized by CFA Association of Pakistan
here Thursday night. "
The State Bank looks forward to working with you
and the whole community towards achieving our shared goals of economic
growth and social prosperity", he added.
He said the SBP has been on the forefront in promoting sound
corporate governance practices and fair competition in the banking
sector by introducing various reforms and prudential regulations.
The SBP has implemented a comprehensive corporate governance regime
for the banks, which is supported by a robust legal and regulatory
framework, risk-based supervision and detailed banking sector reforms,
notably, privatization, liberalization and consolidation of banks.
"The measures taken by SBP have enabled the corporate governance
regime for banks and its different elements are not only compatible
with international best principles but are also parallel with most
other emerging economies", he added.
Anwar said the SBP regularly reviews the international regulatory
standards and best practices issued by the Financial Stability Board
(FSB), Bank for International Settlements (BIS) and other multilateral
agencies and standard setting bodies and assesses them for their
possible implementation in its banking system.
He said that the SBP"s regulatory approach towards promoting
and strengthening of corporate governance has been successful
in inducing a positive change in the corporate governance culture in
the banking sector that has transformed them into healthy and
profitable financial institutions.
SBP Governor said the World Bank"s country review of Pakistan based on
OECD Principles on Corporate Governance rated Pakistan above average
on most of the Principles. The World Bank in a survey also rated
Pakistan as the leader on the robustness of corporate governance
standards and practices in South Asia, he added.
"One key lesson policy makers and regulators learned from the recent
sub-prime crisis is that among many other factors, weak corporate
governance practices in leading financial institutions played a
crucial role in creating the asset price bubble and
misallocation of financial resources.
As a result, policy makers in the post-crisis period are placing more
emphasis on improving market transparency and Corporate Disclosure", Anwar added.
Anwar said the current events unfolding in the international
economic environment are both challenging as well as unique.
Though substantial progress was made to limit the effects of the
financial crisis, the vulnerability still persists in the shape
and size not imagined earlier. Few would have thought that the
effects of the subprime crisis will question the survival of the Euro
Currency and would threaten the entire European region to fall into a
severe recession", he added.
SBP Governor pointed out that we have largely been successful in
mitigating the effects of exogenous shocks and contagion risks of the
international crisis. "But we still face challenges of our own,
and ensuring conservative and prudent policies, should enable us
to remain resilient from exogenous shocks", he added.
Mr. Anwar said that for efficient and well functioning markets, a
responsible and ethical behavior of the participants is a
pre-requisite, apart from an enabling environment, proper
infrastructure, skills and knowledge. "Similarly, domestically it
behooves us to upgrade our corporate governance practices at all
institutions to strengthen our pace of economic recovery and make the
environment more challenging and productive for corporate and private
institutions", he added.
Mr. Anwar said the first ever Nationwide Financial Literacy Program
(NFLP) recently launched by SBP with the collaboration of multilateral
agencies is expected to impart financial knowledge covering basic
concepts such as budgeting, savings, investments, debt management,
financial products and branchless banking among the masses.
He said that the branchless banking regulatory framework in Pakistan
has been ranked number one by the Economist magazine. The fast
growing network of Branchless Banking agents has now reached over
26,000 as of March 31st, 2012 and total volume of transactions have
increased to 25.3 Million (up 23%). "Deposits have grown by 18% to
Rs 594 Million. This fits well into our Financial Inclusion strategy",
he added.