Pakistan’s efforts to reduce poverty and strengthen household resilience are being constrained by limited financial inclusion, with a large share of adults still outside the formal financial system, according to a report.The issue comes as Pakistan continues to face economic pressures including inflation, macroeconomic instability, climate-related shocks and weak employment growth. These challenges have affected household incomes and increased financial vulnerability.Key HighlightsNearly two-thirds of Pakistan’s adult population remains outside the formal financial system, according to the report.Findex 2025 data cited in the report puts the number of financially excluded adults at around 133.3 million.Around one-third of Pakistan’s population is estimated to live below the poverty line.Income inequality increased between 2018-19 and 2024-25.Financial inclusion could help households improve savings, access credit and manage economic shocks.Digital payments and mobile money services remain underused despite their growing availability.Pakistan’s Financial Inclusion GapFinancial inclusion refers to access to formal financial services such as bank accounts, savings, credit, insurance and digital payment systems.However, Pakistan continues to have a significant gap in access and usage. According to Findex 2025 data cited by the report, around 133.3 million adults remain unbanked or financially excluded.Only 18.3% of respondents were reported to have a formal financial account, while mobile money account ownership was at a similar level. Digital payment accounts were reported by 19.8% of respondents.The figures indicate that simply having financial infrastructure available does not necessarily translate into regular usage of formal financial services.Poverty Remains a Major ChallengeThe financial inclusion gap comes against the backdrop of persistent poverty in Pakistan.According to figures cited from Pakistan’s Ministry of Planning, the poverty line for 2024-25 was set at Rs 8,484 per adult per month under the Cost of Basic Needs methodology.Around one-third of the population was estimated to be living below this threshold and struggling to meet basic consumption requirements. Poverty is also reported to be more widespread in rural areas than in urban centres.The World Bank has separately estimated Pakistan’s poverty rate at 25.3% in 2023-24, after the country faced overlapping shocks including inflation, economic instability and the 2022 floods.Income Inequality Also RisingThe report also highlights an increase in income inequality.Pakistan’s Gini coefficient reportedly rose from 28.4 in 2018-19 to 32.7 in 2024-25. The report notes that inequality has become relatively more pronounced in urban areas, even though poverty remains more widespread in rural communities.These differences highlight the uneven impact of economic challenges across regions and population groups.How Financial Inclusion Can HelpGreater access to formal financial services can help households save money securely, obtain credit and make payments more efficiently.For low-income families, access to appropriate financial products can also provide a way to manage unexpected expenses and economic shocks.Financial inclusion can also support small businesses by improving access to formal credit and payment systems.The World Bank has already backed efforts in Pakistan to expand microfinance access. In 2025, it approved 2 million for the Resilient and Accessible Microfinance Project, designed to improve access to microcredit and strengthen the resilience of vulnerable borrowers, particularly in rural areas.Digital Finance Could Play a Bigger RoleDigital financial services could help Pakistan reach people who have limited access to traditional bank branches.Mobile money, digital payments and branchless banking can reduce some geographical and logistical barriers to financial services.However, adoption remains limited. The Findex figures cited in the latest report show that digital payment account ownership remains below one-fifth of respondents.Pakistan’s financial sector therefore faces the challenge of not only expanding access but also encouraging regular and productive use of financial services.Women and Rural Communities Face Additional BarriersFinancial exclusion is not evenly distributed across the population.Research has identified gender disparities in financial access in Pakistan, with women facing additional barriers to formal financial participation.Rural communities can also face greater difficulties because of limited infrastructure, lower financial awareness and distance from formal financial institutions.Expanding digital services, improving financial literacy and strengthening consumer protection could help address some of these barriers.Building Greater Economic ResilienceFinancial inclusion is increasingly being viewed as part of a broader strategy to strengthen economic resilience.Pakistan remains exposed to climate-related shocks, including floods and other disasters that can severely affect low-income households.The World Bank’s microfinance programme specifically aims to help vulnerable borrowers manage climate-related financial pressures and improve access to recovery finance.The country’s social protection system is also being strengthened through digital payment mechanisms. An IMF report noted that Pakistan had created Social Protection Wallets for 7 million Kafaalat beneficiary families, with plans to expand digital disbursement of benefits.What Needs to Change?Experts and policymakers increasingly point to the need for broader access to bank accounts, affordable credit, insurance and digital payments.Improving financial literacy could also help people understand and use available financial products more effectively.At the same time, expanding access needs to be accompanied by consumer protection, responsible lending and stronger digital security.For Pakistan, reducing financial exclusion could therefore form an important part of efforts to tackle poverty, support small businesses and help vulnerable households manage future economic and climate-related shocks.
