Research Analyst
July 16 - 22, 2012

The concept of branchless banking has gained a momentum in Pakistan which is quite reflected in the stellar growth of branchless banking especially in the less developed or rural areas of the country. The presence of a huge un-banked population living in the rural areas of the country is a huge market for the financial players which are coming in a big way to explore this market.

Traveling to a city to perform a transaction is an enormous burden in cost and time for a poor person in a country having poor transportation infrastructure. Avoiding banks in turn implies that the rural poor must worry about the physical security of their cash and may have to turn to local merchants for loans at sometimes exorbitant interest rates. Traditional nationalized banks do not have branches in villages for lack of financial incentive. Poor people will deposit little and have poor or non-existent credit histories, because of which establishing a branch in a rural areas simply makes no economic sense. Branchless banking (BB) has many characteristics like: Use of mobile phones or payment cards as a method of transaction, Use of a shopkeeper or other agent to act as a middleman who can handle physical cash, give receipts and help the users etc and Provision of at least basic banking services such as deposits and withdrawals from which more complex operations can be built. Three features of agent based solutions make it attractive for rural banking. First, shopkeepers and other retailers are already present in the market and understand it. Second, shopkeepers and agents provide a human touch to the banking process. Studies have shown that familiarity with the bankers provides additional confidence in the banking process and helps in its adoption. Third, customers need to have liquid cash. They need to be able to deposit and withdraw remotely, so a physical exchange of cash is essential and these agents and shopkeepers act as middlemen for these purposes.


Karachi 3,001
Lahore 1,952
Faisalabad 1,282
Gujranwala 896
Multan 890
Rawalpindi 884
Toba Tek Singh 690
Sargodha 685
Rahim Yar Khan 591
Bahawalpur 571
Note: 31st March 2012

Currently in the country the average daily BB transactions increased to 280,798 in the third quarter showing a growth of 23 per cent as compared to 228,858 transactions in the previous quarter. BB deposits grew by 18 per cent to Rs 594 million in January-March 2012 quarter as compared to Rs 503 million in the preceding quarter. The total number of BB agents increased by 19 per cent to 26,792 in January-March FY12 quarter as compared to 22,512 in the quarter ended on December 31, 2011. Similarly, the total number of BB accounts surged by 14 per cent to surpass one million mark of 1,059,519 in the quarter under-review as compared to 929,184 in the previous quarter.

The BB agents now have the footprint in 89 per cent of the total districts in Pakistan out of which 52 per cent have more than 90 agents which are mainly located in low income urban or rural communities. The number of registered m-wallet accounts reached to 1.03 million at the end of the quarter under review in which the number of active m-wallets is about 53 per cent. About 5,573 debit cards have also been provided to mobile account holders, indicating efforts to create value proposition in m-wallets.

Bills payment remained the dominating activity of BB with 42 per cent share in total transaction volume, followed by person to person fund transfers and airtime top-ups with share of 32 per cent and 10 per cent, respectively. The BB service providers are trying to increase their linkages with microfinance institutions as loan repayments of Rs 312 million were collected through BB agents during the quarter under review.

The growth expectation in the area of BB is fairly high as the largest brand of the country is in process of technology up-gradation for account opening, forth which it will start registration of customers for Level Zero Account, which will bring the low income segment of the society into financial services loop. Moreover, it is expected that the few other banks are also likely to start their BB operations soon.

State Bank has established a consultative group on BB to foster market development. The Group provides a common plat-form for BB eco-system developers and an opportunity to develop collective policy recommendations on critical issues.

The Waseela Microfinance Bank Ltd has commenced its business operations as a nationwide microfinance bank. The bank has opened its first branch in Islamabad and aims to enter into BB business to increase the outreach of financial services in Pakistan shortly. Recently, the HBL has obtained permission from SBP to start pilot BB services. SBP has also al-lowed Faysal Bank to pilot launch its mobile banking services to its existing customer base. Two other commercial banks, Meezan Bank and Bank Al-Falah, are also keen for entering into BB services.


Total No. of Agents 22,512 26,792 19%
Total No. of Accounts 929,184 1,059,519 14%
Total Deposits as of Date (Rs. in Million ) 503 594 18%
No. of Transactions During the Quarter (No. in million) 20.6 25.3 23%
Value of Transactions During the Quarter (Rs. in Million) 79,410 85,092 7%
Average Size of Transaction in Rs. 3,855 3,367 -13%
Average No. of Transaction Per Day 228,858 280,798 23%