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awareness and capacity building, and (d) greater coordination with stakeholders both locally and globally. Financial Inclusion The three most notable financially excluded areas are Microfinance, Agriculture finance, and SME. In my view Islamic finance is better placed to cater to the needs of these sectors, as people that are reluctant to deal with the conventional finance on religious grounds would have access to financial services. Moreover, this will help in achieving the most important objectives of the Islamic economic system, that is, fair distribution and non -exploitative economic dealings. State Bank has announced policies for Islamic microfinance and would encourage the sponsors and promoters to establish Islamic microfinance institutions, which can provide financial services to the public in accordance with their faith. Reducing transaction costs is particularly important for enabling access for micro and small enterprises, which can be achieved through technology based solutions or using the vast network of mosques and religious places at a very low cost. Another potential area is Agriculture and agro based industry. Agriculture finance could prove to be a very powerful tool for poverty alleviation especially in agrarian economies like Pakistan. This is even more pertinent nowadays as the Agriculture finance could lead to food self-sufficiency thus helping the domestic economy to reduce and stabilize commodity prices. While, most banks do not have rural branch network or/and agricultural lending expertise. As a result, significant number of Agriculture population still relies heavily on informal financial arrangements and there is a need for development of products for Islamic agriculture finance by Islamic banking industry. Realizing the importance of this sector, State
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