Pakistan's textile mill shuts down leasehold spinning unit amid sector challenges
Arctic Textile Mills Limited, formerly called Khurshid Spinning Mills, has announced the immediate discontinuation of operations at its leasehold spinning unit, citing adverse conditions in Pakistan's spinning sector.
The listed company, which manufactures and deals in all types of yarn, disclosed the development in its notice to the Pakistan Stock Exchange (PSX) on Thursday.
'The Board of Directors, in its meeting held on June 19, 2025, has decided to discontinue the use of the leasehold spinning unit with immediate effect.
'This decision was taken in view of prevailing adverse conditions in the spinning sector across Pakistan, characterised by declining demand, increased input costs, and persistent market uncertainty. The operations of the leased spinning unit have become commercially non-viable,' read the statement.
The Pakistani textile sector plays a crucial role in the country's economy, contributing significantly to exports and overall GDP. However, the sector is currently facing challenges, including issues with the Export Facilitation Scheme (EFS) and high energy costs.
Last week, the government, in its federal budget, imposed an 18% sales tax on imported cotton yarn. Hailing the decision, the All Pakistan Textile Mills Association (APTMA) strongly urged the government to extend the 18% sales tax to all yarns and fabrics, whether cotton or polyester, imported under EFS.
Meanwhile, the board of Arctic Textile Mills informed that there will be no material financial impact on the financial position of the company due to the discontinuation of this spinning unit.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
8 hours ago
- Business Recorder
Govt not to discourage solarisation boom, committed to provide maximum relief: PM Shehbaz
Prime Minister Shehbaz Sharif said on Sunday the government would not discourage solarisation boom in the country as he welcomed the ongoing process, which is regarded as the most inexpensive way of producing electricity in the world. Addressing a launching ceremony of 'Apna Meter, Apni Reading', a power smart mobile application, developed by the Ministry of Energy, Power Division, the prime minister said Pakistan was among the few countries where the solarization process was rapidly taking place. Referring to vital reforms in the power sectors, the prime minister termed the launch of the mobile app as a revolutionary reform step which would benefit the consumers. Premier announces to end PTV fee charged from the power consumers in their monthly bills. Its introduction in five languages would improve the provincial coordination and harmony among the provinces, he added. The ceremony was attended by ministers, parliamentarians and relevant authorities. Power sector: federal cabinet approves Rs1.275trn bank loan to cut circular debt The prime minister said a series of reforms were being initiated in the relevant ministry for the last one year and spearheaded by the minister and his team who had been working hard and delivering substantial results. In the past, he said the government had taken different vital decisions, and stressed upon more to provide maximum relief to the consumers. Throughout Pakistan, the prime minister said, vital reforms were introduced in the DISCOs boards where merit-based appointments were made. Effective steps were also taken against corrupt mafia, he said, adding for reduction in power prices, a task force and the minister concerned had really worked hard. The prime minister, in his address telecast on national TV channels, referred to negotiations held with the Pakistani IPPs to bring down power tariff terming it 'hard negotiations and a difficult phase'. Thus, price of per unit was reduced to Rs7.41 for the households. While the government also held negotiations with the banks to settle down the circular debt issue which was a big achievement, he added. The prime minister said when the prices of petroleum prices at the international market were sliding down, the government took its advantage and provided relief to the power consumers in the fortnightly petroleum products price adjustments. Moreover, collective decision was taken to address the rebasing issues and by capping the per unit price under the same rate. The prime minister also announced to end PTV fee charged from the power consumers in their monthly bills. He also identified two challenges in the power sector, including power theft amounting to Rs500 billion and the difference between the high production and less consumption of electricity due to solarization in the country. PM Shehbaz said the government was fully cognizant of the challenges and were exploring ways to take the country on the path of progress, besides ensuring to further reduce the power tariff for the industrial or household consumers. China exports more solar panels to Pakistan than to many G20 nations in 5 years: report Minister for Energy (Power Division) Sardar Awais Ahmed Khan Leghari, addressing the ceremony, said the government was depending upon use of latest technology to ensure transparency and provide relief to the consumers. He said overbilling was a big issue and the government was able to reimburse billions of rupees charged in this regard to consumers. Meter readers' mechanism was now handed over to consumers through the developed app, Leghari said.
Business Recorder
12 hours ago
- Business Recorder
Careem's exit from Pakistan's ride-hailing market
In June 2025 Careem, the Dubai-based ride-hailing pioneer (now part of Uber), announced it would suspend its Pakistan operations on July 18 after nearly a decade in business. In a LinkedIn post Careem CEO Mudassir Sheikha called it 'an incredibly difficult decision,' attributing the withdrawal to 'the challenging macroeconomic reality, intensifying competition, and global capital allocation' that made it impossible 'to justify the investment levels required to deliver a safe and dependable service'. Careem's exit marks the end of an era for Pakistan's ride-hailing scene. The company – which helped introduce app-based booking, cashless payment and women's mobility to Pakistani cities – said it would continue other tech activities (including development of its regional 'Everything App') out of Pakistan. Nonetheless, the core taxi service itself is being wound down, underscoring deep strategic, operational, and economic headwinds in this market. Strategic and Operational Challenges in Pakistan From its launch in October 2015, Careem led Pakistan's nascent ride-hailing industry. It grew to over 12.5 million users and some 820,000 drivers in Pakistan before exiting. It offered a range of services (standard, premium, flexi bidding) and in-ride safety features, and even 24/7 helplines – at considerable cost. But over the last few years this position proved increasingly untenable. On the cost side, Careem repeatedly cited volatile fuel prices as a major constraint. Its local management noted that 'fluctuating fuel prices posed difficulties in adjusting fares to remain affordable for customers while ensuring fair payouts for captains'. Worsening that problem, Pakistan's road infrastructure is notoriously uneven: many highways and city streets are in poor condition, driving up vehicle wear-and-tear and maintenance costs. These factors squeezed Careem's margins. At the same time the company faced increased regulatory compliance costs. From its start, Careem had to work with authorities to legalize a new service model – as one spokesperson put it, being pioneers meant 'introducing the concept of ride-hailing in an unaccustomed market and navigating regulatory hurdles'. The industry even asked the government for special Standard Operating Procedures, fair taxation, and clearer rules for digital platform transportation. In this tough environment, scaling sustainably required constant adjustments (for example, Careem introduced a bid-based 'Flexi' pricing mode like its competitors, backed by shorter drives and dynamic demand models). But even those efforts could not fully offset the rising input costs and compliance challenges. Intensifying Competition Careem's exit also reflected a fierce competitive landscape. Over the last two years several new players have gained ground. The Russian-backed app Yango and the Latin American firm InDrive aggressively expanded in Karachi, Lahore and Islamabad, attracting price-sensitive riders with low fares and flexible bidding features. InDrive reports 26% year-on-year growth in rides and a 25% jump in active users in Pakistan during 2024, crediting its 'fair price' negotiated-fare model for winning market share. Careem introduced similar bidding mechanics, but even then analysis found Yango often had the cheapest promotional fares, making Careem relatively more expensive. Likewise, domestic start-ups filled niches: Bykea's motorbike-taxi network now handles millions of monthly rides in major cities, and even launched some four-wheel services. The upshot is that never-strong margins in emerging markets were squeezed even further. As the Economic Times noted, Ride-hailing giants worldwide (Uber, Lyft, Grab) have been 'exiting unprofitable markets, narrowing focus or pivoting to delivery' as 'rising costs, regulation, and thin margins in emerging markets' bite. Pakistan is no exception. One can also point to Uber's strategy shift as precedent. In late 2022, Uber announced it would cease its own app in five Pakistani cities (leaving only Lahore on its platform) and redirect users to Careem, its 2019 acquisition. Effectively Uber conceded to Careem in those markets. Uber said the change (announced amid a national economic crisis) was aimed at 'minimizing impact' on drivers and riders, as Pakistan grappled with floods and financial turmoil. Careem at the time became the sole on-demand transport platform for many customers. Yet even that consolidated position proved insufficient as new rivals eroded share. Reuters reports that 'newer entrants such as Russia-backed Yango and Latin America's inDrive have expanded in major cities, offering low-cost models,' coinciding with Careem's pullback. Economic and Macro Constraints Beyond competition, Pakistan's macro-economy has been exceptionally unforgiving. Since 2022 the country has endured a currency collapse, brutal inflation and dwindling investor confidence – creating an environment hostile to loss-making platform businesses. The Economic Times and Dawn both document that between 2022 and early 2024 Pakistani inflation surged to around 38% (far above the 5–10% typical range), before moderating in 2025. Consumer demand correspondingly fell; luxury or discretionary expenditures like ride-hailing softened as households grappled with high living costs. Venture funding for tech startups also dried up during the global and local downturn. Many local startups – including Airlift (hyperlocal delivery), Swvl (bus service), VavaCars (used cars) and Truck It In (logistics) – have already shut down or scaled back under the strain. As one analysis put it, Pakistan's digital economy has been 'under pressure' by record inflation and weak consumption. Careem's leaders explicitly cited this tough finance backdrop. The CEO noted that global capital flows into frontier markets have tightened, making it hard to justify further investment in a low-return project. In plain terms, pouring money to subsidize rides became untenable when both currency and income levels were unstable. Rising fuel costs (Pakistan imports much of its oil) and interest rates further squeezed margins. Industry participants like Bykea's founder even lamented that their $30 million in startup funding was a 'fraction of what was spent on the Islamabad metro bus project,' arguing that 'crowd-sourced mobility solutions' deserve more policy support than capital-intensive infrastructure. Careem's trajectory underlines this point: success depended not only on technology and service, but on macroeconomic stability and accessible capital. The business environment was complicated by Pakistan's regulatory landscape. While app-based taxi services offered clear safety and convenience advantages (real-time tracking, vetted drivers, cashless payment), they initially clashed with legacy taxi laws. Ride-hailing firms have long lobbied for fair taxation and clear rules. For example, industry associations urged the government for 'standard practices, reasonable taxation, and fair competition', arguing that these would encourage growth. Careem itself highlighted that its platform delivered 'significant public goods: digital infrastructure, trust, regulation, capability, [and] confidence,' building a foundation for future ventures. But persistent regulatory uncertainty and sometimes retroactive policy moves (like attempts to apply heavy levies on app operators) have weighed on long-term planning. Thus even after nearly $4?billion in payouts to Pakistani drivers (with $500?million of that in Pakistan), Careem could not secure the policy tailwinds needed for profitability. Comparative Market Context Careem's difficulties in Pakistan contrast with its broader success in other markets. The app remains a leading platform across the Gulf and North Africa: today Careem operates in 70+ cities across about 10 countries (the UAE, Saudi Arabia, Egypt, etc.). In the UAE (its birthplace) Careem coexists with Uber, typically weathering economic shifts better than in Pakistan. And in Egypt – a 100-million-person market – Careem competes closely with Uber and local apps, suggesting huge latent demand. Indeed, a 2019 Reuters report noted that in Egypt the 'biggest players are Careem and Uber,' and ride-hailing is seen as still in a growth phase thanks to underdeveloped public transport. By comparison, Pakistan's market is smaller and more brittle: fewer overall riders per capita, and far more severe currency and inflation cycles. This helps explain why Uber (Careem's owner) maintained investment in the UAE and Egypt, even as it withdrew from Pakistan. Notably, Careem had no substantial India presence, where Uber and domestic Ola dominate; that means Careem had little cushion from nearby South Asian markets. Regional competitors' experiences in Pakistan also illuminate the challenges. Global rideshare operators often rationalize out of markets where profits prove elusive. For instance, Uber's Middle Eastern arm recently exited markets like Algeria and Tunisia for similar reasons of low margins. InDrive, for its part, is doubling down on Pakistan, reporting double-digit growth – but even it acknowledges hurdles. inDrive Pakistan's PR lead noted that like others, they face 'regulatory hurdles, infrastructure limitations, and ensuring driver and passenger safety,' and have rolled out special insurance and driver support centers to cope. Yango (a less well-known app) has reportedly engaged in deep discounting and even currency manipulation to gain riders, raising questions about sustainability. All these firms are learning that high operating costs and macro headwinds can swamp rapid growth. Implications for Pakistan's Tech Ecosystem Careem's exit sends a sobering message to Pakistan's startup community. It underscores that global capital retrenchment and local economic challenges can quickly scuttle even successful platforms. Investors and entrepreneurs see that market potential alone isn't enough: reliable macro policy, exchange-rate stability, and supportive regulation are also critical. Already, experts have argued that the startup sector needs more domestic investment buffers, disciplined growth models, and government tech-friendly policies to survive a 'startup winter'. Careem's leadership, for its part, tried to highlight a positive note: its Pakistan tech workforce (nearly 400 engineers) will continue building a regional 'super-app,' with plans to hire 100 more local graduates. This suggests Pakistan remains a source of talent and a base for regional fintech ambitions, even if the ride-hailing chapter closes for now. For policymakers, the episode offers lessons. Ride-sharing has demonstrably created jobs, improved transport options, and even nurtured digital payments usage (Sheikha noted Careem 'helped normalize digital payments' in Pakistan). Sustaining such gains may require more stable tax and regulatory frameworks and perhaps public–private collaboration on digital infrastructure. As one local CEO pointedly remarked, gig-economy firms in Pakistan have raised modest sums compared to government spending on ill-fitting transit projects; he urged a shift of investment toward 'crowd-sourced mobility solutions' that leverage technology to serve commuters more efficiently. In the end, Careem's Pakistan withdrawal is a cautionary tale about the limits of ride-hailing growth amid economic slowdown. It confirms that structural issues – inflation, fuel shocks, poor roads, limited consumer spending and funding – can overwhelm market-leader advantages. As Pakistan's digital economy matures, the hope is that regulators and entrepreneurs alike take these signals to heart: build sustainable models, seek steady funding, and push for an enabling policy environment. Only then can future tech ventures avoid the fate of Careem's ride-hailing arm in Pakistan. Copyright Business Recorder, 2025
Express Tribune
15 hours ago
- Express Tribune
Pakistan's financial inclusion test: a tap away but still out of reach?
It starts, often, with someone else's phone. A woman in a small town outside Lahore wants to send money to her son in Karachi, but she doesn't own a mobile wallet. Her brother does, so she asks him to do it. In Karachi, a fruit seller keeps a basic bank account, not to save, but because he needs it to receive welfare payments. He rarely logs in, never checks the balance himself, only his nephew knows how to use the app. Another elderly man is told he's been registered for something called Raast, but he still walks to the local shop every week to collect cash from his cousin. But sometimes, it starts with your own. A tailor in a two Tando Adam, near Hyderabad now takes digital payments through his mobile wallet, no more waiting for change, no more handwritten ledgers. A housemaid in Karachi uses Raast to send part of her salary home instantly, something that once meant hours in line at a branch she never felt comfortable entering. These are not outliers. They are the shape of inclusion in Pakistan today - present on paper, uneven in practice. In 2014, only 7% of Pakistani adults were financially included, meaning they had an account in their own name with a regulated institution. By 2024, that number has climbed to 35%, thanks mostly to mobile wallets and digital accounts that are easier to open than traditional bank accounts. At a glance, it looks like progress. And in many ways, it is. But access tells only part of the story. For millions, having an account doesn't mean using it. For women, especially, the barriers are deeper - fewer phones, fewer SIM cards, and even less confidence. For the poor, the excluded, the unbanked, formal finance still feels unfamiliar, too complicated, too distant, too risky. And for the system itself, the challenge now is not just to count accounts, but to build trust, relevance, and resilience. The numbers may have moved. But the ground beneath them hasn't shifted as much. A statistical shift Over the last ten years, Pakistan has seen more people brought into the financial system than in the decades before combined. The growth hasn't been slow or subtle, it's been sharp and sweeping. This shift is captured in the Karandaaz Financial Inclusion Survey (K-FIS) 2024, a national study that tracks how real people across Pakistan access, use, and trust financial services. Now in its ninth wave, the survey offers a decade-long view of what financial inclusion looks like on the ground, not just in policy terms, but in lived experience. In 2014, just 7% of adults had an account. Today, it's 35% — over one in three Pakistanis now has access to some form of regulated financial service, be it a bank account, a mobile wallet, or an account with a non-bank financial institution.. But the real story isn't just the overall growth. It's how that growth happened. Banks, which were once the main face of financial inclusion, have seen only a modest rise, from 8% in 2014 to 17% in 2024. In contrast, mobile money wallets have exploded, climbing from virtually zero to 30% in a decade. The shift has been particularly dramatic in the last two years alone, wallet registrations jumped from 19% in 2022 to 30% in 2024. This shift happened not in boardrooms, but in neighborhoods, on phones of riders, house staff, shopkeepers and home-based entrepreneurs. The ease of opening a mobile wallet, no branch visits, no intimidating paperwork, no waiting lines, meant millions once excluded could now touch the system. And then came Raast, the State Bank's instant payment system. In just two years, wallet registrations through Raast jumped from 17% to 41%. Among those using it, 77% cited speed, and 43% said it was more affordable than traditional transfer methods. Even bank registrations with Raast more than doubled, from 22% to 47%. But while access expanded, it didn't expand evenly. Punjab leads at 40%, followed by Islamabad (38%) and Gilgit-Baltistan (33%). Balochistan, AJK, and Sindh lag at 23–26%. These numbers aren't just statistics; they translate to millions of people who are either newly able to pay bills digitally or still standing in line at the local utility office. Urban areas, unsurprisingly, continue to outpace rural ones. Cities benefit from better telecom infrastructure, more agent networks, and greater mobile phone penetration. In villages and remote areas, access often depends on whether there's a mobile signal strong enough to open the app, or a shopkeeper willing to guide someone through a transaction. Even usage varies. K-FIS data shows that while 45% of adults say they've used a formal financial service at least once, only 33% are actively using their accounts, meaning they've made a transaction in the last 90 days. And fewer still are 'advanced users,' those comfortable with features beyond just cashing in or out. What this tells us is simple - access has grown, but depth of use still lags. People are opening accounts. But not everyone is using them. Not regularly. Not confidently. Not yet. Bridging the trust gap In Pakistan, access to financial services has expanded dramatically, but confidence in the system hasn't always kept pace. Despite easier account opening, mobile onboarding, and branchless banking, many people still prefer the comfort of what they know, informal borrowing, physical cash, and financial arrangements within families or communities. This isn't just anecdotal, 85% of borrowers still rely on informal sources. It's a powerful reminder - inclusion on paper isn't always inclusion in practice. For Muneer Kamal, CEO and Secretary General of the Pakistan Banks' Association (PBA), this is where the next chapter of financial inclusion must begin. 'Pakistan has made significant strides in advancing financial inclusion,' he acknowledges. 'But longstanding structural challenges persist, hindering further progress.' Among those challenges is the staggering amount of money still operating outside the formal economy. 'Currency in circulation is estimated at over Rs9.4 trillion in 2025, nearly 26 to 27% of the overall economy,' Kamal points out. The dominance of cash weakens formal systems and makes the shift to digital usage even more difficult. Documentation requirements are another obstacle. 'A large portion of the adult population lacks verifiable income proof, tax records, or formal employment history,' he explains. 'This makes them ineligible for loans or other lending products.' The result - a growing segment with accounts in hand but no real access to the tools that build financial resilience. But instead of seeing these as dead ends, banks are treating them as starting points. 'PBA member banks are adopting a multi-pronged strategy,' Kamal says, 'To further improve trust in formal banking, particularly across underserved and remote communities.' The first part of that strategy is simplified access, cutting down friction through digital onboarding, branchless banking, and partnerships with Electronic Money Institutions (EMIs). People can now open accounts using only a phone, without visiting a branch. Yet real change, Kamal notes, also comes from physical presence. Banks are reaching out through mobile vans to low-access districts and establishing women-led branches staffed by female 'champions' who offer both services and reassurance. These efforts are supplemented by the National Financial Literacy Program (NFLP), where banks conduct in-person community sessions to raise awareness and comfort around digital tools. 'In line with SBP guidelines, banks have collectively strengthened their complaint resolution processes, improved transparency, and enhanced customer communications to build user confidence,' Kamal adds. This work extends to the design of financial products themselves. The days of one-size-fits-all banking are giving way to customized offerings for youth, rural workers, gig economy participants, and women entrepreneurs. Kamal believes such relevance is non-negotiable, 'Banks are tailoring their offerings to ensure that financial solutions are not only accessible but also meaningful.' Still, innovation is not always seamless. Kamal points out that, 'Regulatory complexity continues to slow innovation and inclusion. Although Pakistan's framework has improved, challenges persist, especially for fintechs and non-traditional service providers.' What's needed, he says, is 'A more enabling framework, one that ensures robust cybersecurity while simplifying compliance.' And at the center of it all lies data, or the lack of a connected digital ecosystem. 'There are various disjointed data repositories, from NADRA to the banking sector, to telcos and power consumers,' he explains. 'But this data is not accessible via a common platform, which is a starting point for promoting digital lending, the most powerful tool to harness financial inclusion in Pakistan.' Gendered exclusion She may have a CNIC, a smartphone, and sometimes even an account, but when it comes to full participation in Pakistan's financial system, the average woman is still standing at the edge, waiting to be invited in. According to K-FIS 2024, the gender gap in financial inclusion remains stark. Only 25% of women in Pakistan are financially included, compared to 49% of men. And while 81% of men have a bank account, that number drops to just 47% for women, underscoring a 34% gap in gender-based financial inclusion. Often, even those accounts are not truly theirs to control. Many are opened under pressure, or operated by husbands or brothers, leaving women technically included, but not in control. This disconnect between access and agency is precisely what banks are starting to tackle, especially those offering Shariah-compliant services. For BankIslami, the solution lies not just in offering Islamic banking, but in designing it for her from the ground up. 'The Mashal Banking initiative by BankIslami is specifically designed to cater to the unique needs of the female population of Pakistan, from all walks of life,' says Sohail Sikandar, Chief Operations Officer. 'While every product offered by the bank is relevant for female customers, these particular products have been curated through a gender-lens analysis to address the financial needs of women.' The idea is simple, make finance feel safe, simple, and tailored, values that resonate with women across income brackets, particularly those stepping into formal banking for the first time. But the bank didn't stop at products. They wanted the experience to reflect the change too. 'Earlier this year, we launched its first fully women-managed branch in Karachi to promote gender equality in the workplace,' Sikandar shares. 'The branch, operated entirely by female employees, is an initiative aimed at empowering women as both professionals and customers in Pakistan's financial sector.' Interestingly, this tailored approach is unfolding alongside a much larger shift - the rise of Islamic digital banking. And according to Sikandar, it's outpacing conventional banking models in more ways than one. 'The growth of Islamic digital banking is driven by two key factors - the overall expansion of digital banking and the increasing adoption of Islamic banking,' Sikandar explains. As of now, mobile banking app users in Pakistan have reached 21 million, while branchless banking wallet users total 64.3 million, and e-money users stand at 4.7 million, all showing steady year-on-year growth. What's pushing this forward is not just user preference, but also policy direction. 'The State Bank of Pakistan's goal to convert conventional banks to Islamic banking by 2027 has further accelerated the sector's expansion.' That makes the convergence of Shariah-compliant finance and digital platforms a powerful catalyst, especially for reaching women who want faith-aligned, secure, and convenient financial services. 'As a result, the integration of digital technology with Islamic banking is bound to surpass conventional banking models in both usage and adoption. With expanding digital infrastructure and growing consumer awareness, Islamic digital banking is set to become the new standard, offering ethical and accessible financial solutions to a broader population,' Sikandar adds. Fast, cheap, connected A few years ago, sending money in Pakistan meant choosing between a queue at the bank or a trip to a money transfer agent. Today, a growing number of Pakistanis are using their phones to transfer funds within seconds, thanks largely to the rise of Raast. According to K-FIS 2024, the share of adults making digital transactions has grown by 11 percentage points in the past three years, driven by higher smartphone penetration and simplified user journeys. But the question remains, has Raast become the great equalizer? Or is it still finding its feet among the underserved? The banking sector believes the potential is just beginning to unfold, and the PBA has been right at the center of this transition. 'PBA has played a central role in facilitating and coordinating the industry-wide adoption of Raast,' says CEO and Secretary General, Kamal. The efforts, he explains, cut across policy, operations, and public engagement. 'PBA has worked closely with SBP to ensure member banks are aligned on timelines, interoperability standards, and incentives. Through subcommittees and bilateral dialogues, PBA has coordinated responses to integration challenges.' But the work hasn't stopped at backend systems. Changing habits requires awareness, especially among those who are newer to formal banking. Kamal shares that, banks continue to roll out informational campaigns to promote Raast's use for everyday transactions, salaries, and government payments, especially for women and small businesses. PBA also monitors wallet usage and advocates for use-case expansion beyond just person-to-person transfers. From access to readiness Having a bank account is one thing. Knowing how, and why, to use it is another. In Pakistan, financial inclusion often stalls at the point of access. People may have accounts, but many are left inactive. While over 64% of adults now hold bank deposit accounts (SBP, 2024), Kamal notes that, 'The quality of inclusion remains low. In fact, more than half, 54 million deposit accounts, hold less than Rs5,000, underscoring low savings capacity and even lower activity.' They prefer borrowing from family or saving in cash, not necessarily because banks are out of reach, but because they don't always feel right. According to K-FIS 2024, 85% of borrowers still rely on informal sources, and over half of the country's deposit accounts sit idle with minimal balances. The trust deficit is real, especially when banking feels like it conflicts with religious values. That's where Islamic finance has a unique role. 'Globally, Islamic finance is recognized as a well-suited, Shariah-compliant alternative to conventional banking,' says Sohail Sikandar. 'This model eliminates Riba (interest) and operates on a profit- and risk-sharing structure, ensuring that financial services align with the religious values and needs of the population, especially in trust-deficient environments like Pakistan.' Trust is further built through Musharakah, the principle of partnership. 'The concept of partnership (Musharakah) plays a key role in fostering trust through risk-sharing, which is essential for promoting financial inclusion.' From numbers to meaning For years, financial inclusion in Pakistan was measured by one thing - how many people had an account. But the more meaningful question is how many people feel financially included, who not only have access, but use it, understand it, and feel it works for them. The K-FIS 2024 makes this distinction visible. Just 35% of Pakistanis say they feel included in the financial system. Among women, that number falls to 14%. For Kamal, CEO, PBA, these gaps are not just statistical, they are directional. 'This distinction highlights the need to build not just financial access but financial agency,' he says. 'To meet the National Financial Inclusion Strategy (NFIS) targets by 2028, both policy and market interventions must now shift focus from merely expanding access to enabling meaningful usage, financial empowerment, and inclusive credit access.' What might that shift look like? Kamal outlines a roadmap, not in slogans, but in systems. 'Simplify lending eligibility by utilising alternative credit scoring models that incorporate mobile usage, utility bills, and transaction data,' Kamal shares. In a country where large segments of the population operate outside formal employment or tax systems, rethinking creditworthiness is essential. Traditional requirements often exclude the very people inclusion is meant to serve. Then there's the matter of access friction. 'Enable national eKYC and interoperability to reduce documentation friction and account dormancy,' Kamal adds, pointing to the fatigue users experience when navigating siloed platforms and redundant verifications. The challenge isn't just onboarding, it's engagement. PBA believes financial literacy, especially at the grassroots, is the missing link. 'Scaling digital and financial literacy, especially through public-private campaigns targeting women, youth, and rural areas,' Kamal explains, is the only way to convert passive access into active empowerment. And finally, incentives - rewards for action, not just sign-up stats. 'Incentivise usage, not just account opening, through cashback schemes, subsidised Raast-linked payments, or saving bonuses,' he says. It's a shift from counting accounts to creating capacity. Because inclusion is not just about who holds an account, it's about who feels they can hold their ground, make decisions, and shape their financial future. And that, as this decade of data shows, is a far more meaningful metric. For a woman with a phone in her hand, or a tailor with his first digital wallet, inclusion isn't just about being counted. It's about being seen, and served, by the system built in their name.
