Exploring New Initiatives for Financial Inclusion
Assistant Professor, Institute of Management Sciences, Peshawar
One wonders, why the economic prosperity and extreme poverty are co-existing in the world while there is neither shortage of resources nor dearth of commitment to eliminate at least starvation and extreme poverty. However, market economy cannot be expected to develop institutional setup for promoting social inclusion. The right question is what institutions and products can possibly compliment the market in taking care of those excluded by the market. This paper is addressing the financial inclusion for the poor and unbanked segments of the society by discussing formation of institutions and products, with different models than the conventional banking industry, based on cost plus profit margin modes financing and the market forces of competition. It discusses the potential sources of finance for forming better models for financial inclusion of unbanked segments of the society. The study is a synthesis for new initiatives depicting financial practices, based on deductions from review of literature providing insight into past and current financing practices other than banking. It vouches for institutional framework for better management of potential funds available in the form of Zakah, sadaqat and waqf for further action to promote financial inclusion. Such sources and business models also need enactment of proper laws and establishment of commensurate regulatory authorities for guiding, supervising and controlling their activities. The paper raised the question, what institutions can possibly compliment the market in taking care of those excluded by the market.
Keywords: New initiatives, financial inclusion