a well thought-out deposit mobilisation strategy where innovative products are offered to the clients keeping in view their profiles, needs and preferences. Secondly, the quality of customer service, the bank staff’s responsiveness to the clients’ needs and queries, and strong client-centric relationships play a crucial role in developing and retaining loyal clients. Banks have to invest in technology, tools and staff to make deposit management more effective.
Q: Many financial commentators say high mark-up rates, funds scarcity and rising operational costs are the biggest challenges for the MFBs in Pakistan. What do you think?
A: Like any other industry in Pakistan the microfinance sector has also its share of challenges and opportunities. The country’s microfinance sector has a significant growth potential with an enabling environment, progressive regulatory framework and infrastructure. The market players can utilise government initiatives, like credit guarantees for small and marginalised farmers and low-cost housing guarantee schemes, to increase outreach in rural areas and tap new markets.
In addition, the fast growing branchless banking segment can be utilised to expand outreach by identifying potential clients based on cell phone. Moreover, usage of risk mitigation tools, such as microfinance credit information bureau and strengthening of corporate governance can help MFBs to overcome the challenges and turn them into opportunities.
Q: What role can the microfinance industry play in the financial inclusion process?
A: With a market of 25 million plus people having limited or no access to financial services, the microfinance industry can play a crucial and critical role in the inclusive finance sphere. It can offer a wide array of financial services, including credit products as well as savings, insurance and payments services. With its clientele belonging to the lower income strata, the industry can bring a large segment of population into formal financial system.
Utilising its synergies with branchless banking and outreach in rural areas, it can be an effective conduit for improving access to financial services.
Q: What is the performance of your bank in branchless banking, micro insurance and enterprise lending?
A: We have a footprint of 142 outlets in all the four provinces of Pakistan, Azad Jammu and Kashmir and Gilgit-Baltistan/Chitral and cumulatively have disbursed loans amounting to Rs37.5 billion serving 1.5 million clients since 2002.
First Microfinance Bank Pakistan is a strong player in the country’s microfinance industry and among the top five MFBs. It is the fifth largest provider of microcredit with more than seven percent of market share , third largest provider of micro savings having 17 percent of the market share (active savers), and the fifth largest provider of microinsurance in the country having eight of the market share.
The bank is also the first to introduce the concept of branchless banking through an alternate delivery channel in partnership with the Pakistan Post in 2008. Our bank has been able to provide credit services to its clients in remote areas through the Pakistan Post’s extensive network of sub offices. To facilitate the clients and develop a strong foothold in the branchless banking arena, we entered into an arrangement with HBL Express in 2014 to provide ease of monthly loan installment payments to our clients.