Pakistan: State Bank of Pakistan to Promote Microfinance Banking

Dec 2011
Karachi, Pakistan, December, 02 2011 - Yaseen Anwar, Governor, State Bank of Pakistan (SBP) Friday said the central bank 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.

In his inaugural speech at the 5th Pakistan Microfinance Country Forum, he said that the strategy's effectiveness and success hinges on growth dynamism fundamentally coming from microfinance operators themselves.

"The State Bank will continue to work with all stakeholders, in order to support this nascent industry, which is expected to be a key driver in expanding financial services all over the country," he added.

He said that the role of SBP is to develop the banking infrastructure, encourage the use of successful global practices, and provide the regulatory and supervisory mechanism to enable Microfinance Banks (MFBs) to develop viable business models.

The SBP Governor said that Central Bank will issue regulatory guidelines to MFBs for up-scaling of loans, and develop a reporting structure to assess the geographic distribution of microfinance growth.

Anwar said that the success of microfinance in Pakistan has widely been acknowledged by the international community adding that presently nine MFBs are operating in Pakistan.

He said recent 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, he said and added that within a span of just two years, there are now almost 18,000 branchless banking outlets surpassing the 10,000 conventional bank branches.

He said the combined daily transaction volume of the two prominent branchless banking models 'Easypaisa' and 'Omni' now averages over Rs 175,000, with an average size of Rs 3,700.

The SBP Governor said the Institutional Strengthening Fund (ISF), a UK pound 10 million grant facility launched in December 2008, is intended to strengthen institutional and human resource capacity of MFBs/ MFIs to enhance scale and sustainability of microfinance services.

The ISF has so far approved Rs 522 million for 11 microfinance providers including top and middle tier MFBs and MFIs, he said and added that under the arrangements, the ISF will support 15 projects for investment in HR, IT, product development, risk management systems, business plans and branchless banking development.

He said under ISF, the Pakistan Microfinance Network (PMN) was also provided funding support to conduct research and develop the industry's infrastructure such as the testing of pilot Microfinance Credit Information Bureau (MCIB) in Lahore.

Similarly, the Financial Innovation Challenge Fund (FICF), a UK grant facility, was launched by SBP in May 2011 to provide grants to foster innovation and test new markets, lower cost of delivery, enable systems and procedures to be more efficient and provide new ways of meeting the larger demand for financial services, he said, adding that banks, public sector institutions, microfinance institutions, government agencies, pension funds, and academic institutions were invited to apply for the promotion of payments through bank accounts at branchless banking outlets and also provide other financial services to the beneficiaries.

He pointed out that SBP has started a pilot Financial Literacy Programme (FLP) with the private sector as an implementing partner. The Programme is the first ever initiative to promote financial literacy among the general public at the national level, he said and added that the dissemination will be made through TV channels, regional Radio, print media and mobile network operators.

In addition, field training and street theatres will also be used to target beneficiaries, he said and added that the programme will impart knowledge about basic financial concepts such as budgeting, savings, investments, debt management, financial products and branchless banking.

The pilot phase will target about 50,000 beneficiaries with emphasis on low income group, he said and added that after completion of the pilot programme, an impact assessment of the pilot will be conducted and based on the results and recommendation the programme will be scaled to the national level.


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