Microfinance in Pakistan

The Aga Khan Rural Support Programme (AKRSP) laid the
foundations of the microfinance sector in the country in 1982,
beginning in the Northern Areas and Chitral provinces

The First MicroFinanceBank Ltd. Pakistan: Replacing Despair with Hope and Confidence in a Better Future

Operating across a range of entities from small savings and microcredit organizations to major commercial banks and insurance companies listed on national stock exchanges, AKDN institutions in Pakistan have provided financial services for more than 60 years.

The Aga Khan Rural Support Programme (AKRSP) laid the foundations of the microfinance sector in the country in 1982, beginning in the Northern Areas and Chitral. By 2000 a total of over US$ 8 million had been saved by members of more than 3,260 village organizations, with more than US$ 28 million disbursed since the inception of AKRSP.

The First MicroFinanceBank Ltd. of Pakistan (FMFB-P) started operations in March 2002 as the first microfinance bank licensed under the regulatory framework of the Microfinance Institutions Ordinance 2001. It initially took over the credit and savings activity of AKRSP, and began a programme of urban microcredit in Rawalpindi and Karachi in 2002. Since then, the Bank has gradually expanded its reach to a network of over 36 branches/units in both rural and urban areas of the country.

In the last four years, FMFB-P has disbursed over US$ 30 million in loans and mobilized over US$ 13 million in savings from over 70,000 clients. Approximately one-third of its borrowers and staff are women. In 2003, FMFB-P successfully launched and is continuing to implement a domestic electronic funds transfer service that allows customers to remit funds across the country quickly and in a secure manner. The bank also offers a housing improvement loan product in its rural branches. Credit life insurance and plans to extend its core business to include health and education related products. Besides providing financial services, it plans to offer non-financial services to micro entrepreneurs that focus on enterprise development, as well as clients’ wellbeing including health, nutrition, and education.

The efforts of FMFB-P have also gained international recognition. It was the youngest of the five winners of 2005 CGAP Financial Transparency Award. Two clients also won the 2005 Global Microentrepreneurship Award.

AKAM worldwide

AKAM’s microfinance initiatives range from village lending cooperatives to self-standing microfinance institutions to full-fledged microfinance banks. These activities currently operate in Afghanistan, Burkina Faso, Egypt, India, Kazakhstan, Kenya, Kyrgyz Republic, Madagascar, Mali, Mozambique, Pakistan, Syria, Tajikistan, Tanzania, and Zanzibar. Often they are part of wider integrated development strategy being implemented by the AKDN within each country. In addition to providing financial services to the poor, they may include business or technical advisory/training extension services and business development programmes that work directly with local entrepreneurs.