Microfinancing plans taking stride in Pakistan.

• Author: Kazmi, S. Kamal Hayder

Byline: S. Kamal Hayder Kazmi

The microcredit schemes' main objectives which identified by the experts are to halt exploitation of the poor caused through costly informal credit, to offer small loans to poor people at comparatively lower cost as against to available informal loans, to finance economically and socially workable programs/schemes those cannot be sponsored otherwise, to empower women within houses as decision makers and in Pakistan by active economic participation, to create maximum careers/employment openings, to create self-reliant and self-employed people and to decline poverty, accelerate growth and enhance the living standards on sustainable basis.

They have also recorded that the microfinance is perceived as a viable apparatus to battle neediness by offering money related administrations to the individuals who don't approach or are ignored through business banks and budgetary establishments.

Microfinance Banking Indicators (Rs Billion)

Indicators###18-Mar###19-Mar

No. of Branches###916###1,087

Number of Borrowers###2,777,164###3,371,695

Gross Loan Portfolio###152###201.27

Deposits###189###236.02

Number of Depositors###25,492,075###36,111,999

Equity###36###48.44

Assets###255.03###325.22

Borrowings###14.05###19.95

NPLs###1.80%###3.28%

Monetary administrations given by Micro Finance Institutions (MFIs) for the most part incorporate reserve funds and credit. The Economic Survey FY2019 identified that the State Bank of Pakistan (SBP) has permitted Microfinance Banks (MFBs) to open accounts of Afghan refugees holding Proof of Registration (PoR) Cards, issued through NADRA as acceptable identity document. SBP has enhanced the lending limits under 'Housing Finance' for MFBs through increasing the maximum loan size from Rs. 500,000 to 1,000,000.

Furthermore, the restriction to maintain 60 percent of housing portfolio within the loan limit of Rs. 250,000/- is also being removed. Statistics showed that the federal government vide Second Supplementary Finance Bill FY2019, has announced that with effect from 1st July 2019, declined rate of taxation @ 20% (instead of 35%) on interest income of Banking Companies from additional advances to micro, small and medium enterprises; low cost housing finance and farm credits for 4-year (from Tax Year 2020 to Tax Year 2023) subject to fulfillment of certain situations. This would further encourage MFBs to extend credit to priority sectors.

Survey also recorded that to provide relief to adversely...