KARACHI - Yusupha B Crookes, World Bank Country Director for Pakistan has said that there is a huge growth potential for financial services in Pakistan, especially in rural areas whereby around one-third of the population borrows, but only 3 percent use formal services to do. He said this here on Wednesday while delivering a welcome address at the launch of World Banks report titled Bringing Finance to Pakistans Poor: A Study on Access to Finance for the Underserved and Small Enterprises. The launch and dissemination ceremony of the report was held at a local hotel. The primary purpose of this study is to measure and describe the state of financial services of provision to underserved segments of the market in Pakistan, particularly those with low incomes and small enterprises, said Yusupha B Crookes. In his keynote address, Yaseen Anwar, Deputy Governor State Bank of Pakistan said the SBP and the Federal Government have been actively promoting financial inclusion to help achieve the target of reducing level of poverty to a single digit by 2015. Yasin Anwar said the financial inclusion is the core component of State Banks financial sector development strategy which envisages transforming the financial market into an equitable system with efficient market-based financial services to the otherwise excluded poor and marginalized population including women and young people. The SBP deputy governor said the number of corporate borrowers increased by 83 percent, SME borrowers by 134 percent; agricultural borrowers by 44 percent; consumer finance borrowers tripled over 5 years; whereas mortgage loans over the same period have risen by 78 percent and micro-finance outreach is at 1.7mby December 2008, which is five times the level in Dec. 2003 when the country had only 330,000 clients. He said the State Bank has introduced the Annual Branch Licensing Policy that requires commercial banks with 100 or more branches to open at least 20 percent of their branches outside big cities and set up branches in Tehsil Headquarters where no branch of any bank existed. During 2008, 555 new bank branches were opened, out of which 20 percent i.e. 111 are now in rural areas. Moreover, banks are encouraged to establish low-cost sub-branches, booths and service centres, managed by skeleton staff for performing limited banking functions, he added. He said the State Bank has encouraged partnerships for innovation to create synergies and achieve scale and recently a partnership between Pakistan Post and the First Microfinance Bank on a pilot scale resulted in 35,000 microfinance loans disbursed through 68 post offices in little over one year. On the basis of these encouraging results and future potential, SBP has now issued permission to the Bank to broaden its operations at the outlets of Pakistan Post which has a network of 13,000 post offices across the country, he added. He said the State Banks Expanding Microfinance Outreach Strategy specifically targets the underserved market of poor income groups and envisages that Pakistan will have 3mmicrofinance borrowers by 2010 and 10mby 2015. He also talked about SBPs partnership with the UK Department for International Development which has given a grant of GBP 50mfor the 'Financial Inclusion Program (FIP) that will be implemented in five years targeting poor, small entrepreneurs, women and marginalized communities. He said a Microfinance Credit Guarantee Facility has also been launched with GBP 10min Dec 2008 to incentivize commercial banks to provide wholesale funds to microfinance banks and institutions for on-lending to the poor and marginalized groups to improve financial outreach. Meanwhile, report recommends that there is a dire need to diversify the product range and segmenting clients to increase outreach, simplify procedures, lower costs, and manage risks, to better cater to client needs by reaching out the female client. A report suggests developing linkages with the informal sector would help to formalize the sector, increasing the formal sectors client base.