KARACHI: Microfinance Banks (MFBs) experienced impressive all-round growth during last fiscal year FY18 (2017-18). The aggregate asset base increased to Rs276.1 billion that marked 36 percent rise as on June 30, 2018 as compared to Rs203 billion as on 30th June 2017.
A considerable increase was witnessed in terms of microcredit outreach, with gross loan portfolio grew by 45 percent followed by a parallel increase of 31 percent in number of borrowers, which exceeded 2.9 million at the end of last financial year (2017-18).
Over the years, MFBs have gradually developed capacity to attract competitively priced funding representing deposits and institutional borrowings to meet their need for business and outreach expansion.
According to State Bank of Pakistan (SBP), growth in MFBs’ deposits remained impressive during FY18 (2017-18) as it witnessed a rise of 42 percent whereas aggregate deposit base surpassed Rs208 billion.
The MFBs collectively injected fresh equity of Rs9.2 billion, which resulted in 33 percent increase in overall equity base to reach Rs37.1 billion at the end of FY18.
The microfinance industry, including MFBs and Non-Bank Microfinance Companies (NB-MFCs) witnessed 24.1 percent growth thereby enhancing outreach to around 6.5 million borrowers at the close of FY18. Concurrently, an increase of 40 percent was registered in terms of aggregate microcredit portfolio.
The NB-MFCs continued to serve a larger number of borrowers with 55 percent share, while MFBs took lead in terms of the aggregate value of loans i.e. 67.9 percent.
During the last fiscal year, SBP amended Prudential Regulations for MFBs to enhance outreach of microfinance services for the benefit of underserved and marginalized segments. So far, in response to the market demand to upscale micro-credit ceilings, the maximum loan size for micro-enterprises has been enhanced up to Rs1 million through revision in PR-5 for MFBs.
Further, borrower’s (micro-entrepreneur’s) aggregate exposure has also been enhanced and six MFBs have been allowed to extend micro-enterprise loans up to Rs1 million. The enhanced loan limits have enabled MFBs to adequately cater to micro-enterprises’ and the cottage industry’s needs for credit that are traditionally referred to as the missing middle.
Line of Credit (LoC) facility has been designed by SBP with the support of GOP under World Bank Group’s Financial Inclusion and Infrastructure Project.
(This news/article originally appeared in Business Recorder on November 4th, 2018)