State Bank of Pakistan processing Microfinance Bank Applications

Good news for Pakistan's microfinance sector; it appears that the State Bank of Pakistan (SBP) is currently reviewing approximately ten microfinance bank applications. However, it's rumoured that only up to 4 new applications are likely to be permitted to operate at least in the near future. Currently there are six microfinance banks operating in Pakistan; Khushhali Bank, The First Microfinance Bank Ltd., Pak Oman, Tameer, Rozgar and Network microfinance bank.

The recent increase in activity in the Pakistani microfinance sector, is due to both government initiatives & recent funding from groups such as the Asian Development Bank ($320 million 'Improving Access to Financial Services Programme') & the IFC/Tameer advisory & funding program, to support the reach of microfinance. No doubt, Muhammed Yunus' recent visit to Pakistan has also helped Microfinance remain at the top of the agenda for the Pakistani government.

Additionally, there is much discussion & advice these days from industry officials that the government should review the maximum interest rate currently being charged (20 to 30 per cent) by many Pakistani microfinance institutions. The government fully supports microfinance as a factor in relieving poverty & claims a 10% reduction in poverty. The World Bank however, responds that only a 5% reduction in poverty has been witnessed. Pakistani society still question whether microfinance has had, and can have, an effect on reducing poverty, which many people believe is on the rise.