A call for diversity in lending procedures

Individuals, small firms still lack access to credit, UN official says

Since the 2008 global crisis, there has been a lot of soul-searching about the role of the financial industry at both the national and international levels. People have now recognized many problems in the system that were overlooked during boom times: excessive concentration in a few sectors, ineffective supervision and the exclusion of many communities.

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Lessons were learned, and much was accomplished to tackle some of these problems. But the situation is still far from satisfactory. According to Shamshad Akhtar, executive secretary of the United Nations Economic and Social Commission for Asia and the Pacific, "billions of people are still excluded from the formal financial system".

She said that's why promoting "development finance", a longstanding UN goal, is still a "principal issue". Although poverty has been hugely reduced in recent years, and development finance practices have improved in many emerging nations, demand has also risen.

"Demand for development funding has gone up, although it's changed in context and texture quite a bit, so we need to think how can we position the global and national financial systems to serve the requirements of sustainable development," Akhtar said.

"Banks don't necessarily cater to micro and small clients. Poverty remains a pervasive issue. And banks do not provide long-term funding" of the sort required for development, she said.

She served as governor of Pakistan's central bank before working at the Asian Development Bank for 15 years.

Akhtar offered some examples from Pakistan to illustrate how the concept of "development finance" has evolved.

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