RECORDER REPORT

KARACHI: With an assets base of Rs 203.3 billion, the Microfinance Banking Industry grew by 52.5 percent during the last fiscal year (FY17).

According to State Bank of Pakistan (SBP), the microcredit portfolio posted an increase of 53.5 percent to reach Rs 111.9 billion as at end of FY17 compared to Rs 72.86 billion end of FY16. Similarly, the number of borrowers of Microfinance banks (MFBs) grew by 29.9 percent to 2.209 million during FY17. Asset base grew by 52.5 percent to Rs 203.3 billion end of last fiscal year compared to Rs 133.324 billion end of previous year.

During the last fiscal year, SBP has further strengthened regulations regarding AML/CFT Regime in MFBs and now MFBs are required to install Biometric Verification System (BVS) on all branches by end 2017. They are required to develop a Transaction Monitoring System (TMS) by June 30, 2018 capable of producing meaningful alerts based on pre-defined parameters/thresholds for analysis and possible reporting of suspicious transactions.

MFBs collectively injected fresh equity of Rs 5.25 billion during FY17, which resulted in 23.2 percent increase in overall equity base that reached Rs 27.9 billion at the end of FY17 from Rs 22.7 billion last year.

The growth in MFBs’ deposits base also remained impressive at 68.3 percent during the period with the aggregate deposit base reaching Rs 146.5 billion compared to Rs 87 billion as at the close of preceding year. Concurrently, the number of depositors increased to 21.951 million from 12.782 million last year thus registering a 71.7 percent growth in retail outreach over June, 2016.

The impressive growth in the amount and the number of depositors can be ascribed to large number of M-wallet accounts mobilized by Mobilink Microfinance Bank (MMFB). During FY17, MMFB alone contributed 84.1 percent (or 7.7 million) of 9.1 million additional deposits mobilized by the MFBs.

As of June 2017, the microfinance sector comprises of 51 microfinance providers including 11deposit taking MFBs licensed by SBP and 40 Non Bank-Microfinance Providers licensed by the Securities & Exchange Commission of Pakistan.

The sector was able to extend micro-credit services to over 5.202 million low income borrowers by June 30, 2017, registering an increase of 25 percent from 4.161 million last year. Concurrently, a growth of 57 percent or Rs 62.127 billion was also registered in the gross loan micro-credit portfolio that increased to Rs 171 billion from Rs 108.8 billion during the preceding year. The average loan balances also increased by Rs 6,703 to reach Rs 32,868.

According to SBP, A Line of Credit (LoC) is being established with the funding support of the government of Pakistan under the World Bank’s Financial Inclusion Infrastructure Project. The LoC will allow MFBs to improve women and microenterprises’ access to credit.