KARACHI, December 7, 2024: A recently released report by Fair Finance Asia (FFA) sheds light on the performance of financial institutions across five Asian nations, including Pakistan, in empowering consumers as key contributors to sustainability. The scorecard, titled Empowering Consumers as Drivers of Sustainability in Asia’s Financial Sector, evaluates 15 banks on four critical dimensions: financial inclusion, consumer protection, financial literacy, and engagement mechanisms.
Among Pakistani banks, United Bank Limited (UBL), Muslim Commercial Bank (MCB), and the National Bank of Pakistan (NBP) performed moderately well in financial inclusion (average score: 6.7/10) and consumer protection (6.9/10). However, their performance in financial literacy (3.3/10) and consumer engagement (1.2/10) lagged significantly behind.
The scorecard, launched on December 4 in honor of the International Day of Banks, was developed by FFA in collaboration with regional coalitions, including Fair Finance Pakistan, and supported by the research organization Profundo. Pakistani banks participated in the evaluation process, but their public disclosures revealed substantial gaps.
Key Findings for Pakistani Banks
Despite targeted financial products for underserved populations, UBL, MCB, and NBP lack publicly disclosed benchmarks for their inclusion initiatives. Furthermore, none of these banks publish strategies to mitigate over-indebtedness or provide avenues for addressing the social and environmental impacts of financed projects.
The absence of transparent communication with consumers about sustainable finance options underscores a disconnect between the banks and their stakeholders. Additionally, the banks fail to disclose the specifics of their financed projects, leaving consumers uninformed about potential risks and impacts.
Country-Wide Performance Highlights
Pakistani banks achieved a consolidated average score of 4.2 out of 10, ranking alongside Filipino banks as the top performers in the region. However, the results emphasize the need for a holistic approach that balances financial inclusion with robust consumer empowerment strategies.
Expert Opinions
Asim Jaffry, Country Program Lead at Fair Finance Pakistan, criticized the profit-first mindset, stating, “Pakistani banks often prioritize financial gains over consumer well-being, overlooking the broader social and environmental impacts. It’s time for banks to adopt policies that empower citizens and safeguard the environment.”
Nadeem Iqbal, CEO of TheNetwork for Consumer Protection in Pakistan, highlighted the lack of inclusivity, saying, “The banking sector needs a comprehensive definition of vulnerable groups, expanding beyond traditional categories to include marginalized communities.”
Fair Finance Asia’s Program Lead, Bernadette Victorio, emphasized the importance of education and transparency, remarking, “Consumers demand greater accountability from banks. Empowering them with knowledge will foster informed financial decisions aligned with sustainability goals.”
Call to Action
Fair Finance Pakistan urged banks to comply with transparency requirements under Article 19A of the Constitution and align with international sustainability standards. By prioritizing informed consumer participation, banks can foster trust and contribute to a more sustainable financial ecosystem.
This report serves as a wake-up call for Pakistani banks to bridge the gap between profit-making and meaningful consumer empowerment.
