KMBL - idol in helping sustainable, inclusive economy.

Byline: SHABBIR KAZMI

KMBL - idol in helping sustainable, inclusive economy

Prudent risk mitigation and diversifying services are the bank's key strategy Focus on education has facilitated financial inclusion, empowered individuals Khushhali Bank has one of the largest client base amongst microfinance dealers Interview with Mr. Aameer Karachiwalla - President/CEO, Khushhali Microfinance Bank Limited

Profile

With over 30 years of experience, Mr. Aameer Karachiwalla is a fellow of the Institute of Chartered Accountants of Pakistan and a long-serving Director and Chairman of the Board of Directors of Khushhali Microfinance Bank Limited.

Mr. Karachiwalla was re-appointed as the Chief Financial Officer of UBL in July 2016. He joined UBL in 1998 and has previously held the positions of Chief Operating Officer, Chief of Staff and Group Executive Retail Banking at UBL.

During this time, he has been instrumental in launching the bank's branchless banking business, implementing the IT vision of the bank and in developing the bank's overall restructuring plan which led to its successful privatization. He is also the Chairman of the Board of UBL Insurers Limited and Director at 1Link.

Before joining UBL, Mr. Karachiwalla held senior positions at a number of financial institutions and multinationals including American Express Bank, Citicorp Investment Bank and Artal Group of Companies.

PAGE: Can you share your insightful perspectives on the differences between microfinance and conventional banking? Additionally, we would love to hear more about the relationship between UBL and Khushhali Bank.

Aameer Karachiwalla: It is important to note that UBL has been a pioneer in microfinance and was one of the founding investors in Khushhali Microfinance Bank since its inception in 2000. Conventional banking tends to serve a diverse range of customers, including large corporations, small and medium-sized enterprises, and retail customers, while microfinance banking, and specifically Khushhali Bank, is primarily focused on providing financial services to individuals and small businesses in Pakistan, especially those with low-income levels who do not have access to traditional banking services in agriculture, livestock, and micro and small enterprises (MSEs) sectors, with a special focus on women entrepreneurs and low-income households.

Microfinance requires a personalized and community-oriented approach, which involves building relationships with customers and offering customized financial solutions to meet their unique needs and circumstances. Additionally, microfinance institutions operate on smaller scales, with lower transaction volumes and smaller loan sizes, requiring a different cost structure and risk management strategy.

Although UBL and Khushhali Bank are separate entities, there has been a long-standing relationship between the two banks. In 2012, UBL increased its shares in Khushhali Bank to 30%, making it the largest single investor, while foreign shareholders own the remaining 70%. UBL not only provides financing and cash management facilities to Khushhali Bank but also offers technical support, which has helped to improve its operations and overall performance. This mutually beneficial partnership allows both banks to leverage resources and expertise to better serve their customers and support the economic growth and development of Pakistan as a whole.

PAGE: What methods does Khushhali Microfinance Bank use to provide financial services to clients in remote and underdeveloped areas of Pakistan, and what are the unique challenges that arise in doing so?

Aameer Karachiwalla: As one of its primary areas of focus, Khushhali Microfinance Bank employs various channels to provide financial services to clients in remote and underdeveloped areas of Pakistan. These channels include a retail network, mobile banking, agent banking, and community-based approaches. The retail network serves as a physical point of contact for clients, offering loans, savings, and money transfers. Meanwhile, mobile banking enables clients in remote areas to access their accounts, make transactions, and receive updates on their account status. Additionally, a network of loan officers and other retail staff provides financial services on behalf of the bank.

However, providing financial services to clients in remote and underdeveloped areas presents unique challenges, such as inadequate infrastructure, low levels of financial literacy, security concerns and the lack of collateral. These challenges can make it difficult for microfinance banks to operate effectively and for clients to access financial products and services. For example, inadequate infrastructure such as lack of roads, electricity, and internet connectivity can hinder the bank's ability to provide services, while low levels of financial literacy can make it challenging for clients to understand financial...