SAARCFINANCE

Introduction

Terms of Reference

Report on the Activities of SAARCFINANCE

• April 16, 2006
• June 18, 2006

SAARCFINANCE Staff Exchange at a Glance

SAARCFINANCE Seminars

e-Newsletter

INTRODUCTION

The SAARCFINANCE was established on 9 September 1998 as a regional network of the SAARC Central Bank Governors and Finance Secretaries. It is a permanent body, which got formal recognition of SAARC at the 11th SAARC Summit, held in Kathmandu , Nepal in January 2002. As per the decision of the Summit, Chairperson of SAARCFINANCE is invited to the sessions of the SAARC Council of Ministers to make a presentation on SAARCFINANCE activities. The SAARCFINANCE Chair moves in rotation with the change of the SAARC Chair. Its meetings of SAARC Central Bank Governors and Finance Secretaries take place twice a year, concurrently with the IMF/World Bank Annual and Spring meetings.

Board Objectives

 SAARCFINANCE Coordinator

Each central bank established a SAARCFINANCE Cell in its Research Department to coordinate the activities of SAARCFINANCE. Member central banks also appoint a Coordinator. The coordinators meet twice a year to facilitate the working of the Network. The Coordinator of the central bank of SAARC Chairperson's country acts as the central Coordinator.

Nomination of Coordinators in Ministries of Finance

As per the decision of 7 th and 8 th SAARCFINANCE meetings, five members Bhutan , Nepal , Pakistan , Sri Lanka and Maldives has nominated SAARCFINANCE Coordinators in their respective Ministry of Finance. However, the 9 th meeting of the Network decided that the Coordinators from Central Banks are sufficient at present to deal with the SAARCFINANCE matters. Subsequently it was also decided during the 4 th meeting of Coordinators to leave it up to the country in question to decide about having a Coordinator at the Ministry of Finance. However, as decided earlier, all correspondence and information sharing would continue to take place through Central Banks' Coordinators.

 SAARCFINANCE Secretariat

The Network has a rotating Secretariat. It moves to the chairing central bank of SAARCFINANCE as the chairmanship shifts. The objective of the Secretariat is to assist the Chair and to coordinate among the SAARCFINANCE Coordinators.

 Staff Exchange Program

Staff exchange program is one of the major objectives of the SAARCFINANCE. Since the inception of the SAARCFINANCE, various officers of the member central banks have visited various institutions of member countries under this program. The topics of the visits have covered a broad range of issues: from risk-based supervision to human resource management and forward marketing arrangements for agricultural product, etc. Considering the effectiveness of the staff exchange program, including training, seminars, etc., the matter of cost sharing is left entirely to the countries concerned.

Seminars, Studies, Workshops, Symposiums

As per the decision of the 13th SAARCFINANCE meeting, every member Central Bank (except Bhutan and Maldives) would organize at least one seminar every year. The SAARCFINANCE members have already conducted a number of seminars, studies, workshops and symposiums on different topics concerning monetary policy, foreign exchange management, human resource management, oil price hike, micro finance, pyramid schemes, e-commerce, financial sector assessment, using national currencies in SAARC trade etc.

Sharing Information

As one of the major objectives of the Network, a good number of publications and other documents on various policy issues are exchanged among the member country's institutions. Sharing information among the SAARCFINANCE institutions progressed satisfactorily.

Involvement of Other Financial Institutions

In the case of the involvement of other financial institutions, as per the decision of the 9th SAARCFINANCE meeting, the institutions that are under the regulatory purview of the central banks could be invited to participate in the SAARCFINANCE activities like research, training, seminars etc., if such activities would be useful for them. In the meeting it was also decided that the multilateral institutions like the World Bank, IMF, ADB, BIS etc., could be involved for technical matters in the training and seminar programs but the leadership should lie with the SAARCFINANCE itself.

SAARCFINANCE Link on Central Bank’s Website

As per the decision of 4 th SAARCFINANCE Coordinators’ Meeting, the member central banks have created a separate link of SAARCFINANCE at their websites. Work is underway to improve the link and post new materials into the respective websites.

TERMS OF REFERENCE OF SAARCFINANCE

(Approved by Twenty-second Session of Council of Ministers, Kathmandu, Nepal 2-3 January 2002)

A.  STRUCTURE

• SAARCFINANCE will be a permanent body at the level of Governors of Central Banks and secretaries of Finance of SAARC Member States.
• SAARCFINANCE shall submit its report to the SAARC Council of Ministers through SAARC Finance Ministers.
• Each Central Bank will establish a Cell to coordinate the activities of SAARCFINANCE.
• The SAARC Secretariat would assist and coordinate activities of SAARCFINANCE. The Cell in the Central Bank of the country holding the Chairpersonship of SAARC could function as the SAARCFINANCE Secretariat.
• SAARCFINANCE meetings of Central Bank Governors and the Secretaries of Finance shall be held at least twice a year at the time of the spring and annual Meetings of the IMF and the World Bank.
• SAARC Secretary-General or his representative will attend the SAARCFINANCE Meetings of Central Bank Governors and Secretaries of Finance whenever they are held in the SAARC region.

B.   BROAD OBJECTIVES OF SAARCFINANCE

• To promote cooperation among Central Banks and Finance Ministries in SAARC Member Countries by staff visits and regular exchange of information.
• To consider and propose harmonization of banking legislations and practices within the region etc.
• To work towards a more efficient payment mechanism within the SAARC Region and strive for higher monetary and exchange cooperation.
• To forge closer cooperation on macro-economic policies of SAARC Member States and to share experiences and ideas.
• To study global financial developments and their impact on the region including discussions relating to emerging issues in the financial architecture, IMF and World Bank and other international lending agencies.
• To monitor reforms of the international financial and monetary system and to evolve a consensus among SAARC countries in respect of the reforms.
• To monitor international currency and capital flows and to work towards a common SAARC position.
• To evolve wherever feasible joint strategies, plan and common approaches in international fora for mutual benefit particularly in the context of liberalization of financial services.
• To undertake training of staff of the Ministries of Finance, Central Banks and other financial institutions of the SAARC member countries in subjects relating to economics and finance.
• To explore networking of the training institutions within the SAARC Region specializing in various aspects of monetary policy, exchange rate reforms, bank supervision and capital market issues.
• To promote research on economic and financial issues for the mutual benefit of SAARC member countries.
• To consider any other matter on the direction/request of the SAARC Finance Ministers, Council of Ministers or other SAARC bodies.

Report on the Activities of SAARCFINANCE
April 16, 2006

I. Framework of SAARCFINANCE

The SAARCFINANCE was established on 9 September 1998 as a regional network of the SAARC Central Bank Governors and Finance Secretaries. It is a permanent body, which got formal recognition of SAARC at the 11th SAARC Summit, held in Kathmandu , Nepal in January 2002. As per the decision of the Summit , Chairperson of SAARCFINANCE is invited to the sessions of the SAARC Council of Ministers to make a presentation on SAARCFINANCE activities. The SAARCFINANCE Chair moves in rotation with the change of the SAARC Chair.

SAARCFINANCE Cell

Each central bank established a SAARCFINANCE Cell in its Research Department to coordinate the activities of SAARCFINANCE. Member central banks also appoint a Coordinator. The Coordinator of the central bank of SAARC Chairperson's country acts as the central Coordinator.  

Broad Objectives of SAARCFINANCE

• To promote cooperation among central banks and finance ministries in SAARC member countries through staff visits and regular exchange of information.
• To consider and propose harmonization of banking legislations and practices within the region.
• To work towards a more efficient payment system mechanism within the SAARC region and strive for higher monetary and exchange cooperation.
• To forge closer cooperation on macro-economic policies of SAARC member states and to share experiences and ideas.
• To study global financial developments and their impact on the region including discussions relating to emerging issues in the financial architecture, IMF and World Bank and other international lending agencies.
• To monitor reforms of the international financial and monetary system and to evolve a consensus among SAARC countries in respect of the reforms.
• To evolve whenever feasible joint strategies, plan and common approaches in international fora for mutual benefit particularly in the context of liberalization of financial services.
• To undertake training of staff of the ministries of finance, central banks and other financial institutions of the SAARC member countries in subjects relating to economics and finance.
• To explore networking of the training institutions within the SAARC region specializing in various aspects of monetary policy, exchange rate reforms, bank supervision and capital market issues.
• To promote research on economic and financial issues for the mutual benefit of SAARC member countries.
• To consider any other matter on the direction/request of the SAARCFINANCE, Council of Ministers or other SAARC bodies.

II. SAARCFINANCE Activities

(a) Handing Over SAARCFINANCE Chair and Chairman’s Presentation on the Activities of the SAARCFIANCE

The SAARCFINANCE Chair moves in rotation with change of SAARC Chair. Accordingly, with the change of SAARC Chair to Bangladesh in November 2005 , the formal handing over of SAARCFINANCE Chair from Pakistan to Bangladesh took place during 13 th meeting of the Network, held in September 2005 in Washington DC .

At the 11 th SAARC Summit, held in Kathmundu in January 2002, it was decided that SAARCFINANCE Chairperson would be invited to the future sessions of the Council of Ministers to make a presentation on the SAARCFINANCE activities. Accordingly, the fourth presentation by Dr. Salehuddin Ahmed, Governor, Bangladesh Bank the Chairperson of the Network took place at the 26 th session of the SAARC Council of Ministers held at Dhaka , Bangladesh on 11 th November 2005 .

(b) SAARCFINANCE Meetings

The SAARCFINANCE meets twice a year concurrently with the IMF/WB Annual and Spring Meetings. Since its inception thirteen meetings were held till now. The 13 th meeting of SAARCFINANCE was held on 25 th September 2005 in Washington DC during Annual Meetings of the IMF/WB. Prior to that 10 th meeting of the Network was held in Washington DC on 24 th April 2004 followed by 11 th meeting on October 2004 and 12 th meeting on 15 th April 2005 .

(c) SAARCFINANCE Coordinators' Meetings

To facilitate the working of the SAARCFINANCE network, it was decided at the 13th SAARCFINANCE meeting that Coordinators should meet twice a year and each country could be represented by 2-3 delegates. Five Coordinators' meeting took place so far. The 4 th and 5 th meeting of the SAARCFINANCE Coordinators were held in Islamabad on 23 rd September 2004 and 30 th August 2005 respectively. The meeting discussed a number of issues noted below.

• There was a consensus on the desirability of making concerted efforts to make the forum more effective. In addition to increased interaction and cooperation between SAARCFINANCE and SAARC Secretariat, launching of a yearly publication by SAARCFINANCE was proposed.

• It was decided that every member Central Bank (except Bhutan and Maldives ) would engage itself in staff exchange programs involving at least 5 officials (from SAARC central banks) per annum.
• To prepare a logo of SAARFINANCE, Reserve Bank of India volunteered to come up with different designs of logo for final selection.

• The need for facilitation of granting visas by the host countries to officials nominated to attend programs organized under the banner of SAARCFINANCE was noted for appropriate action by SAARCFINANCE members.

The 6th SAARCFINANCE Coordinators' Meeting is expected to be held in Dhaka , Bangladesh in the first week of July 2006.

(d) Nomination of Coordinators in Ministries of Finance

As per the decision of 7 th and 8 th SAARCFINANCE meetings, Bhutan , Nepal , Pakistan , Sri Lanka and Maldives nominated SAARCFINANCE Coordinators in their respective Ministry of Finance. However, the 9 th meeting of the Network decided that the Coordinators from Central Banks are sufficient at present to deal with the SAARCFINANCE matters. Subsequently it was also decided during the 4 th meeting of Coordinators to leave it up to the country in question to decide about having a Coordinator at the Ministry of Finance. However, as decided earlier, all correspondence and information sharing would continue to take place through Central Banks' Coordinators.

 (e) SAARCFINANCE Secretariat

For the establishment of a permanent formal SAARCFINANCE Secretariat, considering that not enough workload existed for the time being, the existing arrangement be kept continued as per the decision of the 9th SAARCFINANCE meeting.

 (f) Involvement of Financial Institutions

In the case of the involvement of the financial institutions, as per the decision of the 9th SAARCFINANCE meeting, the institutions that are under the regulatory purview of the central banks could be invited to participate in the SAARCFINANCE activities like research, training, seminars, etc., if such activities would be useful for them. In the meeting it was also decided that the multilateral institutions like The World Bank, IMF, ADB, BIS, etc., could be involved for technical matters in the training and seminar programs but the leadership should lie with the SAARCFINANCE itself.

(g) Sharing Information

Sharing information among the SAARCFINANCE institutions progressed satisfactorily. A good number of publications and other documents on various policy issues were exchanged among the member institutions.

(h) SAARCFINANCE Link on Central Banks' Website

As per the decision of 4 th SAARCFINANCE Coordinators’ Meeting, State Bank of Pakistan, Central Bank of Sri Lanka and Bangladesh Bank have created a link of SAARCFINANCE at their websites. Work is underway to improve the link and post new materials into the respective websites.

(i) Staff Exchange Program

Since the inception of the SAARCFINANCE, 178 officers visited various institutions of member countries under Staff Exchange Program. Itcovered a broad range of issues: from risk-based supervision to human resource management and forward marketing arrangements for agricultural product, etc. Considering the effectiveness of the staff exchange program, including training, seminars, etc., the matter of cost sharing is left entirely to the countries concerned.

RBI – Reserve Bank of India, CBSL-Central Bank of Sri Lanka, SBP-State Bank of Pakistan

NRB-Nepal Rastra Bank, BB-Bangladesh Bank

(j) Seminars, Studies, Workshops, Symposiums

It was decided at the 13th SAARCFINANCE meeting that every member Central Bank (except Bhutan and Maldives ) would organize at least one seminar every year. The SAARCFINANCE members conducted 11 seminars, 2 studies,one workshop and 2 Governors' symposiums from September 1998 till now. In recent years Central Bank of Sri Lanka conducted a seminar on “Combating Pyramid Schemes" during 3-4 June 2005; State Bank of Pakistan organized a seminar on Conduct of Monetary Policy and Management of Capital Flows on August 29, 2005; Central Bank of Sri Lanka also hosted a seminar on " Oil Price Hike: Implications for SAARC Countries" during 20-21 January, 2006.

Reserve Bank of India conducted a workshop on "E-commerce, Payment Systems and Securities Technology in India " in 1999. Nepal Rastra Bank conducted a study on "The Feasibility of Using National Currencies in SAARC Trade" in March 2000. State Bank of Pakistan conducted another study on "Financial Sector Assessment" in 2002. Reserve Bank of India has prepared a technical paper on “Oil Price Hike- Implications for SAARC Countries" in January 2006.

SAARCFINANCE Governors' Symposium on Communication Policy of Central Banks was held in Mumbai, India during 8-10 September 2005. The upshot of the discussions during the Symposium was that the SAARC Central Banks, though with varying degrees of the level of progress, attach considerable importance to communication policy for prompt dissemination of their policy stance, intentions behind such policies and views on emerging issues in a more transparent way. It was recognized that transparency, timeliness and credibility are main features of the communication policy. While communicating its evolving policy stance from time to time, the central banks need to share its dilemmas of policy formulation, apprise the public at large of any warning signals and most importantly, reveal shifts in priorities when they occur. It was also felt that optimality of communication should be kept in mind since too much communication may crowd out the useful component of information provided by the market, thereby disrupting the feedback mechanism that is crucial from the viewpoint of policy making. During the Symposium there were active exchange of views and the event provided a valuable opportunity for very useful sharing of experience among the participating Governors.

Most recently, Bangladesh Bank hosted another Governors' Symposium on Microcredit in Dhaka during February 15-16, 2006. Some of the challenges/strategic areas for future actions of the SAARCFINANCE forum as raised by Dr. Salehuddin Ahmed, the Governor of the Bangladesh Bank in his concluding remarks are:

• In line with the Charter of the SAARC Summit, the SAARC member countries should ensure inclusive financial systems where access to credit is opened to all individuals including the poor so that the process of poverty eradication from the SAARC region would be expedited.
• Up scaling microcredit borrowers to small and micro enterprises is a growing demand.
• As donor funds of microcredit will diminish in near future, MFIs will have to prepare more efficient financial strategies for the sustainability of microcredit programs.
• The issue of high rate of the cost of fund should be resolved within the shortest possible time so that fund could be made available for the poor people at the lowest possible interest rates or service charges.
• More attention is also needed to focus on the regulatory framework of MFIs which is very important element of the microfinance program.
• With our vision we must go beyond microfinance that include health, nutrition and other financial services where the issue of microfinance should be dovetailed with the mission of SAARC Development Fund (SDF) and SAARC Poverty Alleviation Fund (SPAF); SDF has three specific windows namely economic, social and infrastructure.

III. Ongoing and Planned Activities of SAARCFINANCE

• South Asian Development Bank (SADB)

The idea was floated in January 2004. During the SAARCFINANCE meeting ( 4th October 2004), it was felt that the idea did not have strong potential and was conceived premature.

(b) ASEAN-SAARC Cooperation

The 25 th Session of the SAARC Council of Ministers held in Islamabad , Pakistan on 20 July 2004 suggested that the Network should meet their ASEAN counterparts on the sidelines of World Bank/IMF Annual and Spring Meetings.

 (c) Broadening of SAARCFINANCE Mandate

A proposal received from Securities and Exchange Commission of Pakistan regarding broadening the mandate of SAARCFINANCE by capital market integration was considered at 12 th meeting of the Network and it was decided that because of the existence of multiple regulators involved, and expense and cost-benefit implications, it would be preferable to benefit from the views of Finance Ministry official represented on SAARCFINANCE on financial sector issues that are otherwise outside the purview of central banks. In addition, financial/capital market regulators for non-bank sectors can be invited to special discussions and seminars on relevant topics.

(d) Seminars and Studies

Nepal Rastra Bank is organizing a seminar on "Human Resource Management in SAARC Central Banks" in Kathmandu . State Bank of Pakistan will host a seminar on "SME Finance" this year. Central Bank of Sri Lanka is expected to co-ordinate the study on " Integration of Rural Commodity and Financial Markets ". India , Pakistan and Sri Lanka would undertake basic studies of their system relating to " Contractual Savings ", while other members would contribute their experiences.

Staff Exchange Program

The proposals of visit of the officials from the following central banks to State Bank of Pakistan are under consideration.

Report on the Activities of SAARCFINANCE
June 18, 2006 

I. Framework of SAARCFINANCE

The SAARCFINANCE was established on 9 September 1998 as a regional network of the SAARC Central Bank Governors and Finance Secretaries. It is a permanent body, which got formal recognition of SAARC at the 11th SAARC Summit, held in Kathmandu , Nepal in January 2002. As per the decision of the Summit , Chairperson of SAARCFINANCE is invited to the sessions of the SAARC Council of Ministers to make a presentation on SAARCFINANCE activities. The SAARCFINANCE Chair moves in rotation with the change of the SAARC Chair.

SAARCFINANCE Cell

Each central bank established a SAARCFINANCE Cell in its Research Department to coordinate the activities of SAARCFINANCE. Member central banks also appoint a Coordinator. The Coordinator of the central bank of SAARC Chairperson's country acts as the central Coordinator.

Broad Objectives of SAARCFINANCE

• To promote cooperation among central banks and finance ministries in SAARC member countries through staff visits and regular exchange of information.
• To consider and propose harmonization of banking legislations and practices within the region.
• To work towards a more efficient payment system mechanism within the SAARC region and strive for higher monetary and exchange cooperation.
• To forge closer cooperation on macro-economic policies of SAARC member states and to share experiences and ideas.
• To study global financial developments and their impact on the region including discussions relating to emerging issues in the financial architecture, IMF and World Bank and other international lending agencies.
• To monitor reforms of the international financial and monetary system and to evolve a consensus among SAARC countries in respect of the reforms.
• To evolve whenever feasible joint strategies, plan and common approaches in international fora for mutual benefit particularly in the context of liberalization of financial services.
• To undertake training of staff of the ministries of finance, central banks and other financial institutions of the SAARC member countries in subjects relating to economics and finance.
• To explore networking of the training institutions within the SAARC region specializing in various aspects of monetary policy, exchange rate reforms, bank supervision and capital market issues.
• To promote research on economic and financial issues for the mutual benefit of SAARC member countries.
• To consider any other matter on the direction/request of the SAARCFINANCE, Council of Ministers or other SAARC bodies.

II. SAARCFINANCE Activities

(a) Handing over SAARCFINANCE Chair and Chairman’s Presentation on the Activities of the SAARCFIANCE

With the change of SAARC Chair to Bangladesh in November 2005, the formal handing over of SAARCFINANCE Chair from Pakistan to Bangladesh took place during 13 th meeting of the Network, held in September 2005 in Washington DC .

At the 11 th SAARC Summit, held in Kathmundu in January 2002, it was decided that SAARCFINANCE Chairperson would be invited to the future sessions of the Council of Ministers to make a presentation on the SAARCFINANCE activities. Accordingly, the fourth presentation by Dr. Salehuddin Ahmed, Governor, Bangladesh Bank and the current Chairperson of the Network, took place at the 26 th session of the SAARC Council of Ministers held at Dhaka , Bangladesh on 11 th November 2005 .

(b) SAARCFINANCE Meetings

The SAARCFINANCE meets twice a year concurrently with the IMF/WB Annual and Spring Meetings. Since its inception thirteen meetings were held till now. The 13 th meeting of SAARCFINANCE was held on 25 th September 2005 in Washington DC during Annual Meetings of the IMF/WB. Prior to that 10 th meeting of the Network was held in Washington DC on 24 th April 2004 followed by 11 th meeting on October 2004 and 12 th meeting on 15 th April 2005 . The 14th SAARCFINANCE Meeting will be held in Singapore on September 18, 2006 .

(c) SAARCFINANCE Coordinators' Meetings

To facilitate the working of the SAARCFINANCE network, it was decided at the 13th SAARCFINANCE meeting that Coordinators should meet twice a year and each country could be represented by 2-3 delegates. Five Coordinators' meeting took place so far. The 4 th and 5 th meetings of the SAARCFINANCE Coordinators were held in Islamabad on 23 rd September 2004 and 30 th August 2005 respectively. The 5 th meeting discussed a number of issues noted below.

• There was a consensus on the desirability of making concerted efforts to make the forum more effective. In addition to increased interaction and cooperation between SAARCFINANCE and SAARC Secretariat, launching of a yearly publication by SAARCFINANCE was proposed.

• It was decided that every member Central Bank (except Bhutan and Maldives ) would engage itself in staff exchange programs involving at least 5 officials (from SAARC central banks) per annum.
• To prepare a logo of SAARFINANCE, Reserve Bank of India volunteered to come up with different designs of logo for final selection.

• The need for facilitation of granting visas by the host countries to officials nominated to attend programs organized under the banner of SAARCFINANCE was noted, for appropriate action by SAARCFINANCE members.

The 6th SAARCFINANCE Coordinators' Meeting is scheduled to be held in Dhaka, Bangladesh during July 5-6, 2006.

(d) Nomination of Coordinators in Ministries of Finance

As per the decision of 7 th and 8 th SAARCFINANCE meetings, Bhutan , Nepal , Pakistan , Sri Lanka and Maldives nominated SAARCFINANCE Coordinators in their respective Ministry of Finance. However, the 9 th meeting of the Network decided that the Coordinators from Central Banks are sufficient at present to deal with the SAARCFINANCE matters. Subsequently it was also decided during the 4 th meeting of Coordinators to leave it up to the country in question to decide about having a Coordinator at the Ministry of Finance. However, as decided earlier, all correspondence and information sharing would continue to take place through Central Banks' Coordinators.

(e) SAARCFINANCE Secretariat

For the establishment of a permanent formal SAARCFINANCE Secretariat, considering that not enough workload existed for the time being, the existing arrangement be kept continued as per the decision of the 9th SAARCFINANCE meeting.

(f) Involvement of Financial Institutions

In the case of the involvement of the financial institutions, as per the decision of the 9th SAARCFINANCE meeting, the institutions that are under the regulatory purview of the central banks could be invited to participate in the SAARCFINANCE activities like research, training, seminars etc., if such activities would be useful for them. In the meeting it was also decided that the multilateral institutions like The World Bank, IMF, ADB, BIS etc., could be involved for technical matters in the training and seminar programs but the leadership should lie with the SAARCFINANCE itself.

(g) Sharing Information

Sharing information among the SAARCFINANCE institutions progressed satisfactorily. A good number of publications and other documents on various policy issues were exchanged among the member country's institutions.

(h) SAARCFINANCE Link on Central Bank’s Website

As per the decision of 4 th SAARCFINANCE Coordinators’ Meeting, State Bank of Pakistan, Central Bank of Sri Lanka and Bangladesh Bank have created a link of SAARCFINANCE at their websites. Work is underway to improve the link and post new materials into the respective websites.

(i) Staff Exchange Program

Since the inception of the SAARCFINANCE, 178 officers visited various institutions of member countries under Staff Exchange Program . Itcovered a broad range of issues: from risk-based supervision to human resource management and forward marketing arrangements for agricultural product, etc. Considering the effectiveness of the staff exchange program, including training, seminars, etc., the matter of cost sharing is left entirely to the countries concerned.

RBI – Reserve Bank of India, CBSL-Central Bank of Sri Lanka, SBP-State Bank of Pakistan

NRB-Nepal Rastra Bank, BB-Bangladesh Bank

(j) Seminars, Studies, Workshops, Symposiums

It was decided at the 13th SAARCFINANCE meeting that every member Central Bank (except Bhutan and Maldives ) would organize at least one seminar every year. The SAARCFINANCE members conducted 11 seminars, 2 studies,one workshop and 2 Governors' symposiums from September 1998 till now. In recent years Central Bank of Sri Lanka conducted a seminar on “Combating Pyramid Schemes" during 3-4 June 2005; State Bank of Pakistan organized a seminar on Conduct of Monetary Policy and Management of Capital Flowson August 29, 2005; Central Bank of Sri Lanka also hosted a seminar on "Oil Price Hike: Implications for SAARC Countries" during 20-21 January, 2006.

Reserve Bank of India conducted a workshop on "E-commerce, Payment Systems and Securities Technology in India " in 1999. Nepal Rastra Bank conducted a study on "The Feasibility of Using National Currencies in SAARC Trade" in March 2000. State Bank of Pakistan conducted another study on "Financial Sector Assessment" in 2002. Reserve Bank of India has prepared a technical paper on “OilPrice Hike- Implications for SAARCCountries" in January 2006.

SAARCFINANCE Governors' Symposium on Communication Policy of Central Banks was held in Mumbai, India during 8-10 September 2005. The upshot of the discussions during the Symposium was that the SAARC Central Banks, though with varying degrees of the level of progress, attach considerable importance to communication policy for prompt dissemination of their policy stance, intentions behind such policies and views on emerging issues in a more transparent way. It was recognized that transparency, timeliness and credibility are main features of the communication policy. While communicating its evolving policy stance from time to time, the central banks need to share its dilemmas of policy formulation, apprise the public at large of any warning signals and most importantly, reveal shifts in priorities when they occur. It was also felt that optimality of communication should be kept in mind since too much communication may crowd out the useful component of information provided by the market, thereby disrupting the feedback mechanism that is crucial from the viewpoint of policy making. During the Symposium there were active exchange of views and the event provided a valuable opportunity for very useful sharing of experience among the participating Governors.

Recently Bangladesh Bank hosted another Governors' Symposium on Microcredit at Dhaka during February 15-16, 2006. Some of the challenges/strategic areas for future actions of the SAARCFINANCE forum as raised by Dr. Salehuddin Ahmed, the Governor of the Bangladesh Bank in his concluding remarks in the symposium are:

• In line with the Charter of the SAARC Summit, the SAARC member countries should ensure inclusive financial systems where access to credit is opened to all individuals including the poor so that the process of poverty eradication from the SAARC region would be expedited.
• Up scaling of microcredit borrowers to micro and small enterprises is a growing demand.
• As donor funds of microcredit will diminish in near future, Micro Finance Institutions (MFIs) will have to prepare/undertake more efficient financial strategies for the sustainability of microcredit programs.
• The issue of high rate of the cost of fund for microcredit should be resolved within the shortest possible time so that fund could be made available for the poor people at the lowest possible interest rates or service charges.
• More attention is also needed to focus on the regulatory framework of MFIs which is very important element of the microfinance program.
• With our vision we must go beyond microfinance that include health, nutrition and other financial services where the issue of micro finance should be dovetailed with the mission of SAARC Development Fund (SDF) and SAARC Poverty Alleviation Fund (SPAF).

Number of SAARCFINANCE Seminars, Workshops, Governors' Symposiums and Studies at a Glance

 III. Ongoing and Planned Activities of SAARCFINANCE 

• South Asian Development Bank (SADB)

The idea was floated in January 2004. During the SAARCFINANCE meeting ( October 4, 2004), it was felt that the idea did not have strong potential and was conceived premature. However, the Second Meeting of Financial Experts to consider a SAARC Financial Mechanism was held at the SAARC Secretariat, Kathmundu on 23-24 February 2006.The Meeting was held to work out detailed modalities of the SAARC Development Fund (SDF) as amended by the Thirty-first Session of the Standing Committee( Dhaka 9-10 November 2005).

(b) ASEAN-SAARC Cooperation

The 25 th Session of the SAARC Council of Ministers held in Islamabad , Pakistan on 20 July 2004 suggested that the Network should meet their ASEAN counterparts on the sidelines of World Bank/IMF Annual and Spring Meetings. This issue is still unresolved.

(c) Broadening of SAARCFINANCE Mandate

A proposal received from Securities and Exchange Commission of Pakistan regarding broadening the mandate of SAARCFINANCE by capital market integration was considered at 12 th meeting of the Network and it was decided that because of the existence of multiple regulators involved, and expense and cost-benefit implications, it would be preferable to benefit from the views of Finance Ministry official represented on SAARCFINANCE on financial sector issues that are otherwise outside the purview of central banks. In addition, financial/capital market regulators for non-bank sectors can be invited to special discussions and seminars on relevant topics.

(d) Seminars and Studies

The scheduled seminar of May 3-5, 2006 on "Human Resource Management in SAARC Central Banks" by Nepal Rastra Bank has been postponed. State Bank of Pakistan will host a seminar on " SME Finance" this year. Central Bank of Sri Lanka is expected to co-ordinate the study on " Integration of Rural Commodity and Financial Markets ". India , Pakistan and Sri Lanka would undertake basic studies of their system relating to " Contractual Savings ", while other members would contribute their experiences.

(e) Staff Exchange Program

The proposals of visit of the officials from the following SAARC central banks are under progress.

1. BIS SAARCFINANCE Seminar on Promoting Financial Stability- The Role of Central Banks, 15-18 March, 2004
2. SAARCFINANCE Seminar on Exchange Rate Management , 12-14 February, 2004
3. SAARCFINANCE Seminar on Human Resources Management in Central Banks, 21-23 August, 2006
4. Study on the Feasibility of Using National Currencies in SAARC Trade, 2000
5. BIS SAARCFINANCE Seminar on Promoting Financial Stability