In any economy, there are the privileged and the not-so privileged. The latter usually belong to low-income backgrounds, and tend not to have resources for or knowledge about running a business;they are also often unaware of the benefits of banking services in their day to day life.
This is where microfinance institutions (MFIs) such as microfinance banks (MFBs) come in. They provide financial services specifically targeted at individuals and small businesses that need access to banking services attuned to their financial circumstances. These services generally tend to include micro-credit, micro-insurance with low premiums, and savings and deposit accounts. These institutions are significant players in supporting small businesses, helping people assume control over their finances, reducing poverty, and promoting economic development in under-developed areas.
Proponents of microfinance institutions argue that microfinance and mobile financial services have a strong hand in economically empowering the underprivileged and the ‘under-banked’ in rural, far-flung areas. This argument, in Pakistan’s case, has merit. Financially inclusive banks venturing into a customer base previously left untapped, offering low-cost solutions and expert financial knowledgenot only find great business opportunities but also positively impact lives of their customers.
The Citi-PPAF Microenterpreneurship Awards (CMA) programme, a collaboration between the Citi Foundation and Pakistan Poverty Alleviation Fund not only provide a unique opportunity to small businesses to be recognized for their entrepreneurial and social achievements,but the Awards also aim toraise awareness about microfinance and the best practices in microentrepreneurship including the role of microfinance institutions. Telenor Microfinance Bank (TMB), which has the largest nationwide footprint, has tappedinto a vast population base in rural, far-flung areas of the country, supporting their livelihood and providing entrepreneurship development opportunities.In recognition of its financially-inclusive reach, it recently won the Most Innovative MFI Award at the 13th Citi- PPAF Microentrepreneurship Awards Ceremony.
“We are thankful to the Citi Foundation for this honour. The recognition we receive from this award strengthens our resolve to redouble our efforts and strive passionately to fulfil our promise of empowering societies by bringing them within the fold of digital and financial inclusion. Telenor Microfinance Bank will continue to extend best in class financial services besides constantly innovating to enhance ease and access to its customers,” said Aslam Hayat, acting Chief Executive Officer, Telenor Microfinance Bank on winning the Citi-PPAF Micro-Entrepreneurship award in the category of ‘Most Innovative MFI’.
Telenor Microfinance Bankhas over the years introduced a number of different initiatives that cater to the specific financial needs and situation of its clientele. One of the major steps taken wasdecreasingloan pricing so that in 2017,TMB became the lowest priced microfinance bank in the country. TMB also launched Pakistan’s first ever digital lending service in 2017, thus increasing the efficiency of its loan disbursementand repayment mechanism. The digital lending services eliminate the need for repeated visits to sparsely located bank branches. Within the ambit of digital lending, the Easypaisa loan product has also been launched that allows customers to access small ticket size loans directly on their mobile account without having to visit a Bank branch at all. TMB also offers short tenor consumer loans for capital financing, hybrid financing, retail loans, agricultural loans, and even big ticket loans for a microenterprise or a house etc. There are alsoplans to digitize all loans under PKR50,000, a major step in making the loan process easier and more accessible for Pakistanis.
Federal and provincial governments’ developmental projects, such as e-Kissan, Rashan Program and Benazir Income Support Program (BISP), help the financing needs of the poor in the country. TMB’s partnerships with these programs have resulted in digitized loan and cash disbursements for these grants;thebeneficiaries can access the loan amounts via their mobile accounts, and integration with Easypaisa’s large retail networkallows them to withdraw money at over 70,000 touchpoints spread across Pakistan. BISP beneficiariescan withdraw money through their EasypaisaMobile Account after biometric verification, thereby ensuring that the rightful recipient of the grant receives the money and therefore reducing the risk of embezzlement.
Meanwhile, forthe e-Kissan project, TMB in collaboration with Telenor Pakistan and the Government of Punjab, disburses loans to farmers, who are also given subsidized smartphones equipped with educational apps.Thishelps these farmers in enhancingtheir crop yield and gaining better access to local agricultural markets.
Pakistan still has a long way to go in terms of helping the under-privileged section of its population. However, success achieved by microfinancing services that offer help to the under-served shows that the day is not far when under-banked segments of the Pakistani society would enjoy economic prosperity like the rest of the country.
