PURPOSE OF THIS PROJECT

This project is related to the

comparative analysis of Microfinance
Banks and which have significant
involvement in micro finance in
Pakistan.The essential purpose of
microfinance is alleviation of poverty
from the society by enhancing
outreach In this project we have
discussed the Micro finance sector in
detail.

SUBJECT:
FINANCIAL
INSTITUTION
SUBMITION DATE
PROJECT TOPIC:
JUNE
MICROFINANCE SECTOR

SUBMIT TO:
SIR
SUBMIT BY
NAME ROLL NUMBER
AHMAD
MEHREEN
ZARAK

CLASS:
M.B.A,(3.5), (FINANCE).
SEMESTER:
6THSEMESETER
CONTENTS
SR.NUMBER
1 HISTORY
2 VISION STATEMENT
3 MISSION STATEMENT
4 ORGANISATION PROFILE
5 TYPES
6 ORGANIZATIONAL CHART
7 DEPARTMENTS OF ORGANISTAION
8 PRODUCTS
9 FUTURE EXPECTS
10 EMPLOYEE COMPENSATION
11 SWOT ANALYSIS
12 CONCLUSION
13 RECOMMENDATION
 MICRO FINANCE INSTITUTIONS
HISTORY:
Microfinance Ordinance (2001) defines a Microfinance Institution (MFI) as a company that
accepts deposits from the public for providing microfinance services. Microfinance was
pioneered in Pakistan in the 1960s through Camilla Pilot Project in former East Pakistan
(present-day Bangladesh).MFIs in Pakistan include Microfinance Banks (MFBs) regulated by
the State Bank of Pakistan the concept of microfinance has been present in rural and urban
areas in the form of unsupervised cooperatives since a fairly long time. However,
microcredit as a revolutionary social phenomenon was started by the Grameen Bank during
the 1970s. Since then, the progress of microfinance in the world and especially in Asia has
been inspired by the success story of the Grameen Bank. Pakistan, though a late starter in
this industry, has also made considerable developments in Microfinance. Though Non-
Government Organizations (NGOs) and Rural Support Programs (RSPs) have been providing
micro-credit in the country since the 1980s, Pakistan is one of very few countries which have
a separate legal and regulatory framework for microfinance banks (MFBs).

:
VISION:
FRONTIERS OF FORMAL
FINANCIAL SERVICES
REACH OUT TO ALL

MISSION STATEMENT:
SUPPORT THE FINANCIAL
SECTOR,ESPECIALLY RETAIL
FINANCIAL SERVICE PROVIDERS.TO
ENHANCE THEIR
SPACE,QUALITY,DIVERSITY AND
SUSTAINABILITY IN ORDER TO
ACHIEVE INCLUSIVE FINACIAL
SERVICES.
ORGANISATION PROFILE:
Microfinance practitioners;
Microfinance Banks operate in Pakistan i.e.
• FINCA Microfinance Bank
• APNA Microfinance Bank
Head office;
Mostly banks located in Islamabad and Karachi
Core values;
• Transparency
• Innovation
• Collaboration
• Diversity
• Empowerment
Chairperson;
• SYED NADEEM HUSSAIN
CEO;
• SYED MOHSIN AHMED
Licensed & regulated by;
• State Bank Of Pakistan under MBIs Ordinance 2001

Information/Documents for Submission;

i. The application should be duly filled-in and signed by the person as

authorized by the board of MFI.
ii. Institutional Assessment Report prepared and completed as per the
guidelines given in above paragraphs.
iii. Detail of assets & liabilities to be transferred to the MFB - the
transfer shall be admissible at value assessed/determined by the
audit/consulting team during institutional assessment phase.
TYPES:
Types of microfinance products.
 Advans Microfinance Bank
 APNA Microfinance Bank (AMFB)
 FINCA Microfinance Bank
 Mobilink Microfinance Bank (MMBL)
 National Rural Support Program Microfinance Bank (NRSP Bank)
 PAK-OMAN Microfinance Bank (POMFB)
 Telenor Microfinance Bank Ltd. (TMFB)
 The First Micro Finance Bank Ltd. (FMFB)
 Ufone Microfinance Bank
 Jazz Microfinance Bank
 Khushali Microfinance Bank
 Waseela Microfinance Bank

ORGANIZATIONAL CHART
DEPARTMENTS OF ORGANIZATION
 Risk Management Department
 Internal Audit & Compliance Department
 Administration Department
 Credit Department
 Cash Department
 Operation department
PRODUCTS:
Loans:
Focuses on delivering financial products, which can build the entrepreneurial capacities of
the microfinance clients, increase their appetite for formal financing, ensure sustainable
development and employment generation. The products, designed on the basis of primary
research, intend to support the transition of microfinance clients undertaking income
generating activities, into micro entrepreneurs/enterprises and small enterprises.
Savings:
Current account
Term deposit
Bachat TanzZeem
Special micro finance certificate

Insurance:
For micro insurance to succeed, products and services need to respond to the needs of low-
income segments. Learning from its clients, micro finance banks has worked with various
insurance companies to design micro insurance products, which are appropriate in terms of
coverage, timeliness, accessibility and affordability. Arriving at the appropriate design
requires understanding both the demand for and the supply of micro insurance – formal and
informal.
Remittances and other products:

 Resettlement Program (MIRP) Financial facilities under the Multi Input Resettlement
Program offered to assist people affected by natural disasters i.e. flood, earthquake,
etc.
 Individual finance
 Financing for renewable energy product
FUTURE EXPECTS:
The microfinance sector is
changing fast: the supply
continues to grow with $81.5
billion in loans worldwide and
a 5% growth in the number of
customers in 2012. Services,
actors, regulation and
technologic innovations are
changing for microfinance
tomorrow remains an
alternative to banking
services for more than 2.5
billion people still excluded
from the traditional banking
system globally. The banking sector, the increasing role of new actors, the expansion of
services offered to clients, but also the importance of control in a maturing industry will be
the big topics of microfinance in the next decade.

EMPLOYEE’S COMPENSATION:
A broad brushing of salary scales of the microfinance industry indicated a maximum
monthly salary of Rs. 1.9 million at the senior management level and a minimum monthly
salary of Rs. 7,000 at the lower management level. It was observed that salaries at all levels
varied consistently with size of the organizations.

Senior Management Teams (SMTs)

SMT salaries in the microfinance sector (MFBs and MFIs) were found to vary from Rs. 27,000
to Rs. 1.9 million at the higher end. Average senior management salaries were Rs. 547,000
for MFBs and Rs. 110,000 for MFIs. The salaries at the senior level are more widely
dispersed in the MFI category, but are clustered near the mean for senior MFB staff.
Another trend observed was that salaries in the MFI group were almost a third that of MBF
salaries.

Middle Management Teams (MMTs)

MMT salaries at MFBs were found starting from Rs. 9,000 a month and going up to Rs.
310,000 a month. The average MFB salary was Rs. 104,000 per month; almost third of the
highest salary in the MFB peer group. Monthly salaries at MFIs ranged between Rs. 12,000
and Rs. 140,000 with an average salary of Rs. 43,000.
The trends confirm that Salary levels at MFBs were higher at almost all levels when
compared with MFIs. Similarly, the salary scale for MFBs was lower compared to
commercial banks.
 SWOT ANALYSIS:
As in every other field, also in microfinance it is important to know the strengths,
weaknesses, opportunities and threats that are potentially related to the studied issue.

POSITIVE NEGATIVE

Unsustainability in case of subsidized

financing
Short term cooperation and support from Poor banking infrastructure
political elites.
"Raising" borrowers on nonmarket rates
Across-border spillover effect
Problems in dealing with non-performing
INT High repayment rates loans
ER Ability to attract socially responsible investors Under-developed fraud avoidance
NA Unability to meet the regulatory framework
conditions
L
Shortage of qualified/experienced staff
Corruption, clientelism

Microfinance
Banks

Growing demand
Growing number of socially responsible
investors(potential funding suppliers)
EXT Market openness
ER Profit making pressure
Innovative client approaches
NA Decreasing donor funding
Stable non-authoritarian regimes
L Regulatory changes
Technological progress
Frequent political changes
Know-how transfer from commercial banks
Shift towards individual lending
Agricultural loans development
CONCLUSION
Conclusion in Pakistan, microfinance is relatively less developed sector and a large scope is
available to increase the financial services to poor people in the country. Realizing the
importance of MF in social mobilization and poverty reduction, the Government has geared
up its efforts to provide support to both formal and informal sector. Currently informal
sector, i.e. NGOs and RSPs, is contributing major share towards the coverage of the market,
however, MFBs saw a rapid growth during the last four years and have captured a significant
share in overall coverage of MF sector in the country.

Although the MFBs have recently started their business, Pakistan’s experience also
confirmed the increasingly establishing fact at international level that poor can repay their
loans on time and also has ability to save a part their income. However it is important for
MFBs to increase focus on deposit mobilization to sustain their operations in future as
presently mainly dependent on external funding.

While high performing loans is a healthy sign, it is more important to analyze the impact MF
have on the wellbeing of clientele. Unfortunately, an independent study in this area is
missing in Pakistan case, though MF institutions have done some studies.16 In order to
perform the social impact analysis, there is a dire need of independent survey.

RECOMMENDATION
Commercialization of MF Industry is key to financial and social sustainability and to
trigger a degree of up scaling
i. Raising domestic private capital
ii. Human resource development
iii. Credit union models
iv. Technology
v. Introduction of credit bureau for microfinance borrowers
vi. Effective and synergistic use of Pakistan post resources
vii. Other policy and regulatory measures
viii. New players