by Matthew Castner - Middle East -

MICROCAPITAL BRIEF: Pakistani Government to Extend Microfinance Bank Licenses to Retail Organizations and Mobile Network Operators

The Pakistani government is currently reviewing applications for microfinance banking licenses from large retailers and mobile network operators. Syed Salim Raza, Governor of the State Bank of Pakistan, claims that his country is the first in South Asia to issue these kinds of licenses [1]. He elaborated on the scale and evolution of the branchless banking system at the April 17, 2010, Branchless Banking Conference [2].

Mr Raza broke these branchless banks down into three separate models. The first model is based on kiosks operating from existing retail locations. As an example, he mentioned a partnership between Habib Bank Limited (HBL) [3], founded in 1947 and based in Karachi, Pakistan [4], and the Pakistan Post that has reached 40,000 rural borrowers through 68 kiosks [5]. The second model is based on telephonic networks, and is exemplified by Easypaisa, a partnership between Tameer Microfinance and Telenor founded in October 2009 [6, 7]. Mr Raza stated that this program has reached 25,000 people, who have transacted PKR 4 billion (USD 47.6 million). Finally, Mr Raza detailed the third model, where existing banks offer branchless services. MCB Mobile, a partnership between MCB Bank and Fundamo [8], follows this model and now reaches 60,000 customers transacting PKR 1 billion (USD 11.9 million) [1]. Any institutions falling into these categories can now apply for microfinance banking licensure through this legislation.

Mr Raza stated that this legislation may catalyze Pakistan’s adoption of technological banking solutions. He stated that 46.4 million e-payments totaling PKR 4.1 trillion (USD 488.9 billion) during the last quarter of CY 2009. In the future he expects growth, noting that while 15 percent of Pakistanis have bank accounts, 56 percent have cell phones [5].

By Matthew Castner, Research Assistant

Additional Resources:

[1] The International News: “Branchless Banking Conference,” Shahnawaz Akhter, April 18, 2010, http://www.thenews.com.pk/daily_detail.asp?id=234732

[2] The Nation: “SBP chief to open Branchless Banking Conference on 17th,” April 10, 2010, http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/10-Apr-2010/SBP-chief-to-open-Branchless-Banking-Conference-on-17th

[3] “Bringing Finance to Pakistan’s Poor: Access to Finance for Small Enterprises,” by Tatiana Nenova, Cecile Thioro Niang, and Anjum Ahmad, World Bank Publications: November, 2009.

[4] HBL: “About Us,” http://www.habibbankltd.com/about-us.php

[5] Daily Times: “Pakistan Branchless Banking Conference,” April 18, 2010, http://www.dailytimes.com.pk/default.asp?page=20104\18\story_18-4-2010_pg5_1

[6] Mobile Money for the Unbanked: “Tameer Microfinance Bank and Telenor Provide Insights on easypaisa,” by Paul Leishman, Jaunary 5, 2010, http://mmublog.org/asia/tameer-microfinance-bank-and-telenor-provide-insights-on-easypaisa/

[7] MicroCapital “MICROCAPITAL.ORG STORY: Communications Company Telenor Pakistan Launch Mobile Banking Service with Tameer Microfinance Bank, ” by Christopher Maggio, October 27, 2009, https://www.microcapital.org/microcapitalorg-story-communications-company-telenor-pakistan-launch-mobile-banking-service-with-tameer-microfinance-bank/

[8] Mobile Money for the Unbanked: “Pakistan’s Shared Platform: An Interview with MCB and Fundamo,” Paul Leishman, April 1, 2010, http://mmublog.org/asia/pakistan%E2%80%99s-shared-platform-an-interview-with-mcb-and-fundamo/

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