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December 3, 2011

‘Pakistan must make major breakthrough in microfinance’

National

December 3, 2011

KARACHI: Yaseen Anwar, Governor, State Bank of Pakistan (SBP), said on Friday that the country has one of the lowest financial penetration levels in the world.
“Microfinance in Pakistan has made good progress but must make major breakthroughs to reach millions of underserved people,” he said while addressing at 5th Pakistan Microfinance Country Forum.
“Pakistan has one of the lowest financial penetration levels in the World with 56 percent of the adult population totally excluded, and another 32 percent informally served,” he added.
The SBP governor said that despite considerable support from the government, donor and the SBP, the microfinance sector has only been able to tap a small fraction of the potential market. “The current active borrowers standing at roughly two million,” he added.
He said that the microfinance regulatory framework has been ranked globally at the top in 2010 and 2011 by ‘the Economic Intelligence Unit’ of the UK’s The Economist Magazine. Anwar said that the recent development in mobile phone banking is highly encouraging and that 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, he added. He lauded the role of UKAid and Asian Development Bank in the development of microfinance in Pakistan and said that under the programmes sponsored by these donors, a number of market interventions are managed by the SBP.
SBP governor said that the Microfinance Credit Guarantee Facility (MCGF), a £10 million guarantee facility of UK’s DFID, was launched by SBP in December 2008 to mobilise wholesale commercial funding for microfinance providers through partial guarantees to commercial banks.
“The facility has thus far mobilised commercial funding of Rs3.225 billion for four microfinance providers for

onward lending to around 200,000 new micro borrowers,” he added.
Nadeem Hussain, President and Chief Executive Officer (CEO) of Tameer Microfinance Bank said around 18-20 million account holders have access to credit. “If excluded the multiple account then the number is only at 8-10 million account holders,” he added. He termed branchless banking key to enhance outreach significantly.
Hussain said that potential exists in banking through telecommunication technology. “Presently phone density is one hundred million where banking density is much lower,” he added. —Shahnawaz Akhter

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