The Deputy Governor, State Bank of Pakistan (SBP), Mansoor-ur-Rehman has said that the combined outreach of all micro-finance institutions (MFIs), totalling around half a million clients, is less than 10 percent of the potential clientele base of more than 6.5 million poor households.
Speaking at the inaugural session of a two-day workshop on 'Microfinance' at the Institute of Bankers Pakistan (IBP) here on Friday he said that to fill this gap, there was need for the existing MFIs to rigorously work on building up their capacity.
In this regard, he said, there was a need to improve the efficiency standards and better utilisation of management information systems to enhance the outreach and quality. He said that there was also need to work on pro-poor financial innovation by developing a range of products as per needs of the target market. Similarly, he said, innovative linkages were also required between formal financial sector and the NGOs/MFIs to create synergies and enhance the outreach levels.
The SBP Deputy Governor said that a conducive and enabling policy environment was a prerequisite for development of a sound and vibrant micro-finance sector.
He said it largely stems from the government's and policy makers' belief in the utility of micro-finance, level of their commitment to facilitate development and growth in the sector and the level of trust and co-operation between policy makers and practitioners to work together for serving the poor.
He said that the countries and economies whose governments adopted sector friendly policies and encouraged private sector investment in the sector have seen micro-finance growing at a fast pace benefiting a large number of poor persons.
He said that micro-finance in Pakistan got recognition in late 1990s when the government initiated some very important micro-finance projects and adopted a micro-finance policy to promote and fuel the growth in the sector. The policy recognised micro-finance as an important poverty alleviation tool and an important component of the country's financial system and encouraged private sector's entry in banking with the poor.
He said that the existing policy and regulatory environment for MFIs in the country presented all major features of a conducive and enabling policy environment for MFIs.
These included sustained commitment and substantial investment by the government to help develop the sector; a responsive regulatory framework which allows institutional diversity and encourages, both regulated and unregulated, players to extend financial services to the poor, while remaining in their respective domains.
Ozair A Hanafi, CEO of Pak Oman Micro Finance Bank, said that micro-finance banking needed strong relationship between banks and the customers. "Building relationship, maintaining relationship and enhancing relationship is the key component for success of any organisation in this sector."
Saleem Umer, Chief Executive of IBP, said that 90 young bankers from four banks, Pak Oman Micro Finance Bank, National Bank of Pakistan, United Bank and Soneri Bank, were participating in the workshop, while another 40 trainees from Bank of Punjab were participating in a similar workshop at IBP Lahore office.
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