Championing digital inclusion, financial literacy, and consumer protection across South Asia

For those unfamiliar with SARFII, can you explain how it has developed?

AFI’s South Asia Region Financial Inclusion Initiative was born out of various high-level discussions on the potential for enhancing regional cooperation on financial inclusion in South Asia, and was officially launched in September 2022 under the Chairmanship of the Maldives Monetary Authority.

Over the past two years, SARFII’s collective effort has reaped remarkable results, including identifying key regional policy areas, hosting capacity building training, and collaborating with international organizations such as the IMF, World Bank and ADB. We’ve published a first-of-its-kind publication, Payment Innovation and Risks in South Asia, to guide regional policymakers in enhancing consumer protection and developing inclusive digital infrastructure, while a SARFII women leaders’ roundtable helped showcase existing regional policies on advancing gender inclusive finance.

As I embark on this journey of Chairmanship – alongside our Vice-Chair, the State Bank of Pakistan – I think I speak for all members when I say we look forward to pursuing SARFII’s impactful work, including implementing the regional action plan, identifying new policy areas, identifying members’ unique requirements for enhancing financial inclusion, and strengthening the SARFII structure.

Looking across the region, what progress do you see in advancing financial inclusion?

South Asia has made great strides in advancing financial inclusion, particularly through digital financial services, consumer protection, and financial literacy. Digital financial services are transforming accessibility across the region. In Nepal, policy initiatives by the Central Bank, Ministry of Finance and other related agencies have resulted in a significant surge in QR code payments and mobile banking reaching nearly 24 million users. National Financial Inclusion Strategies are gaining ground regionally, while cross-border digital payment systems – like that between Nepal and India – are making regional transactions more inclusive and efficient.

The surge in mobile phone usage creates new inclusion opportunities. But it has also led to increased cybersecurity risks, including financial services scams and fraud. SARFII’s goal is to ensure that the region effectively uses digital financial services to reach the unbanked population while implementing adequate security measures. Regional initiatives aimed at educating consumers about their rights and responsibilities are building trust and encouraging responsible usage among previously unbanked populations.

Finally, sustainable finance solutions – like Nepal Rastra Bank (NBR)’s Green Finance Taxonomy – are being prioritized regionally to boost climate resilience and protect financial stability against climate impacts.

What are the main remaining barriers to financial inclusion?

Despite significant progress, several challenges persist in achieving comprehensive financial inclusion in South Asia.

The digital divide, particularly in rural and remote areas, limits access to digital financial services. This divide is exacerbated by lower levels of digital literacy among vulnerable groups such as women, youth, the elderly, and rural populations. According to the Global Findex 2021 database, 430 million adults in the region – over half of whom own mobile phones – still don’t have bank accounts.

Women remain underrepresented in our financial systems. While individual members organizations, including NRB, have taken significant steps towards promoting finance for women-led MSMEs, regional collaboration is critical to introducing policies that foster gender-inclusive finance. The SARFII women leaders’ roundtable earlier this year was an opportunity to share and promote regional initiatives towards advancing on this vital issue.

Additionally, across the region, only 8 percent of adults report being able to easily access emergency funds within 30 days – significantly lower than the developing economy average of 27 percent. This indicates a lack of financial resilience that needs to be addressed through improved savings mechanisms and access to credit.

What is your vision for regional financial inclusion?

It involves creating a unified financial ecosystem in South Asia that champions digital inclusion, financial literacy, and consumer protection – especially for vulnerable populations. By facilitating high-level discussions among regional leaders, SARFII can provide strategic guidance on addressing challenges like the digital divide, gender finance disparities, and climate resilience.

In addition to this, I hope SARFII can:

• Enhance data-driven policies, including sex-disaggregated data to ensure policies are inclusive and effective.
• Collaborate with fintech companies offering innovative credit solutions tailored for underserved communities.
• Continue to offer in-country implementation support and systematic knowledge-sharing to tackle the unique challenges facing South Asia.
• Promote tailored capacity-building efforts and facilitate cross-regional cooperation to boost regional growth that benefits individuals, MSMEs, and vulnerable communities.
• Commit to sustainable growth, boosting inclusive green finance across the region.

By doing so, SARFII can make significant strides toward enhancing financial inclusion for all segments of society.