Prospects of Microfinance in Pakistan

Prospects of Microfinance in Pakistan

As their name suggests Microfinance banks are financial institutions, which extend small amounts of loans to poor people. Microfinance banks were established as a result of the prevailing needs of the society and to help out the poor gain access to financial services. The history of microfinance in Pakistan started with the launch of Orangi Pilot Project in Kutchi Abadies of Karachi in early 1980.The microfinance sector of Pakistan has shown an incredible growth over the last few years.

According to the Pakistan Economic and Social Review, the potential customers of the microfinance credit range between 25 to 30 million borrowers. The microfinance banks have set up their branches in rural and remote of areas as well so as to cater the needs of all sorts of small and medium sized enterprises and agriculture sector as well. Most of the microfinance banks operating in Pakistan are serving in the rural areas.

There are more than two dozen active players in microfinance industry in Pakistan including banks, NGOs and rural support programmes. Some of the Micro financing institutions of Pakistan are

  • Kashf Micro Finance Bank (now known as FINCA)
  • National Rural Support Programme (NRSP)
  • First Micro Finance Bank
  • Khushhali Bank
  • Pak Oman Micro Finance Bank Ltd
  • Rozgar Micro Finance
  • Taamer Micro Finance Bank Ltd
  • Advans Pakistan Micro Finance Bank
  • Waseela Micro Finance Bank
  • Apna Micro Finance Bank Ltd

Microfinance banks have emerged as key players in enhancing the process of financial inclusion in Pakistan. There are also multiple opportunities that the sector can exploit for its sustainable expansion. These include poverty reduction, women empowerment, and rural development.

In 2011 Pakistan was ranked first in Asia and third in the world in Economist Intelligence Unit’s overall microfinance business environment rankings. With an impressive growth in branchless banking in the country the microfinance banks are capable to diversify their deposit portfolios over the time. There is a significant increase in the market share of regulated microfinance banks within the overall microfinance sector. Islamic microfinance is also gaining grounds in the country.


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