July 30 - Aug 5, 20

Pakistan has a separate legal framework to govern the microfinance activities of the Microfinance Banks (MFBs). The MFBs are licensed and regulated by State Bank of Pakistan (SBP). Considering the separate needs and dynamics of microfinance, SBP has in place a separate regulatory and supervisory framework for MFBs. Since its creation, the policy framework has seen various improvements on the basis of feedback of key stakeholders and assessment of the evolving needs and conditions of the sector.

To promote the mainstreaming of microfinance into overall financial system, SBP encourages creation of new MFBs and transformation of existing operationally sustainable MFIs into MFBs. The presence of a large potential market and availability of an enabling policy environment offer the opportunities for both social and commercial investors to explore this segment of the financial market.

The SBP has laid down a detailed strategy to promote sustainable growth of the microfinance sector in its new Microfinance Strategic Framework 2011-15, which will foster a pro-poor and sustainable development in the country. The strategy's effectiveness and success hinges on growth dynamism fundamentally coming from microfinance operators themselves.

Experts told PAGE that the success of microfinance in Pakistan has widely been acknowledged by the international community.

Our microfinance regulatory framework has been ranked globally at the top in 2010 and 2011 by the independent 'the Economic Intelligence Unit' an arm of UK's 'The Economist' magazine. According to them, the evolution or trajectory of microfinance has so far remained positive despite many challenges. At present, nine MFBs are operating in Pakistan. The development in mobile phone banking is highly encouraging. The expansion in the retail network of microfinance has been brought about overwhelmingly from agents and mobile phone channels. Within a span of just two years, there are now almost 18,000 branchless banking outlets surpassing the 10,000 conventional bank branches.

They said the combined daily transaction volume of the two prominent branchless banking models 'Easypaisa' and 'Omni' now averages over 175,000, with an average size of Rs 3,700. Though early successes in microfinance industry are laudable, they have yet to create a major dent in the widespread financial exclusion. Currently, micro credit is reaching to only 2 million borrowers whereas the size of the target market is estimated to be 25 to 30 million. they said.

According to them, Pakistan has one of the lowest financial penetration levels in the world with 56 percent adult population totally excluded, and another 32 percent informally served.

Microfinance sector needs to discontinue dependence on external catalysts and focus on improving its financial and operating performance by setting targets for borrowers, savers, portfolio quality, and self-sufficiency. Considerable work still needs to be undertaken to ensure that all microfinance banks and institutions are acting responsibly.

The Kashf Foundation is a successful institution, as it is providing loans to Pakistani women to set up small projects which both bring them an income and enhance their status. "Women in our society do not get the due acknowledgement they deserve for their contribution to the overall economy," the Kashf Foundation founder Roshaneh Zafar said.

Waseela Microfinance Bank, a subsidiary of M/s. Orascom Telecom Holdings (OTH) Egypt, is the 7th Microfinance Bank (MFB) to operate on nation-wide basis whereas two MFBs are operating at district level. The commencement of business of Waseela Microfinance Bank is expected to result in a significant increase in the market share of regulated microfinance banks (MFBs) within the overall microfinance sector. This may also lead to the increased provision of inclusive financial services in the rural and remote areas of the country.

Other microfinance banks operating in the country include Khushhali Bank Ltd., The First Microfinance Bank Ltd., Tameer Microfinance Bank Ltd., Pak Oman Microfinance Bank Ltd., NRSP Microfinance Bank Limited, Kashf Microfinance Bank Ltd, Apna

Microfinance Bank Ltd, and Rozgar Microfinance Bank Ltd. Waseela Microfinance Bank has been established to cater the need for banking and financial services that are simple and easily accessible for the unbanked and under-banked. WMBL will also introduce mass market financial products for providing more choices and benefits to the people of Pakistan.

A spokesperson of Waseela Microfinance Bank Limited said, "Waseela Microfinance Bank and its management will continue to research, innovate and offer customer focused solutions that are easily accessible to the general public. I want to thank the State Bank of Pakistan (SBP) for acting as a progressive and supportive central bank and creating an enabling environment for the holistic growth of microfinance in Pakistan."

Waseela Microfinance Bank Limited is the latest addition to the microfinance industry of Pakistan with a goal to serve lower-income groups by providing structured financial services suited to their needs. WMBL has been established with a vision for economic and trade empowerment in both rural and urban communities, offering customer focused products and outstanding banking services. WMBL is a fully owned subsidiary of Orascom Telecom Holdings, and a sister concern of Pakistan Mobile Communications Limited (PMCL).

According to the new concept of the microfinance, customers need both financial and non-financial services that are tailor-made to suit their requirements. These services include a multitude of targeted credit products with appropriate loan sizes, savings, insurance, enterprise training and market linkages. The target market of the microfinance organizations has continued to be those poor people who have no access to formal sources of credit. Microfinance industry needs to pay attention to continue to innovate, create new partnerships with the growing branchless banking networks for the benefits of have nots.