80 percent population in Pakistan is unbanked, says Nadeem Husain, CEO of Tameer Microfinance Bank
Although the banking sector in Pakistan has grown on appreciably sound footings on the back of the best regulatory guidelines by the State Bank of Pakistan, however, there still are tremendous opportunities for growth especially in rustic life of the country. It is said that 80 percent population is still un-banked in Pakistan which naturally offers tremendous opportunities for investment in the banking sector.
President and CEO of Tameer Microfinance Bank Ltd, Nadeem Husain while sharing his views on the banking industry in general and microfinance bank in particular pointed out that Microfinance banking is more advance in Pakistan than any other country in the region as verification system through NADRA is not available in India, Bangladesh or most of the countries in the region.
Nadeem Husain at a press briefing held at Karachi Pres Club last week said that in this gloomy economic scenario, microfinance banking could be a ray of hope and play a vital role in eradicating the unemployment in the country. He said that Tameer Bank has provided access to finance to people, who were not banked or could not take loans from other commercial banks. He said that Tameer Bank’s outreach has expanded many folds due to Branchless Banking (Easypaisa) which has opened the doors for financial inclusion. “This is a bank for the common people, who can approach and take small loans”, Nadeem assured.
Nadeem said that due to many regulations microfinance banking could not reach to its targeted consumers as there should be at least 30 million consumers of micro financing while it only has 300,000. He said that Pakistan’s model of microfinance banking is far better than Grameen Bank in Bangladesh as Tameer Bank’s volume through Easypaisa is three times more than Grameen Bank.
He said that Tameer Bank through Easypaisa has announced the availability of its Inter Bank Fund Transfer (IBFT) service to enable customers to transfer funds between a number of banks via the 1-link switch. With IBFT for Easypaisa, the service has become the first mobile money service in Pakistan to become interoperable with the existing banking infrastructure. Easypaisa’s IBFT service will be available for its Mobile Account holders and Over-the-Counter (OTC) customers.
Easypaisa Mobile Account holders can now move funds from any Bank Account into their Easypaisa Mobile Account and vice versa conveniently and securely, thus overcoming one of the hurdles of getting funds into the branchless banking systems.
Once the funds are in the Easypaisa Mobile Account, customers can proceed to use the most convenient and secure bill payment, money transfer or airtime recharge service in the country through the Easypaisa Mobile Account on their mobiles and nearly 6 million unique customers using Easypaisa services each month, banked customers can deposit cash into their bank accounts without having to go into their bank branches.
He said that customers will only need to approach an Easypaisa shop, provide their CNIC and their bank account number to use this service. This cash deposit facility will be available at Easypaisa shops while they are open, often late into the night and even on weekends.
“It is great step in the branchless banking industry, a revolutionary development, which will act as a catalyst for the robust growth of the branchless banking industry in Pakistan,” Nadeem said.
“Easypaisa now connects the unbanked directly to the banking infrastructure by enabling them to send and receive money on their Mobile Accounts and through OTC services. Almost 80 percent of the population in this country is still unbanked and Easypaisa is working day and night to achieve financial inclusion of the unbanked people of Pakistan. In line with this ambition, Easypaisa’s IBFT service provides a platform to the unbanked class to connect with the traditional banking infrastructure, which is likely to boost the mobile banking culture in the country”, Nadeem added.
SMEs-Micro Finance Combination
Meanwhile the right combinations in the economic development always plays significant role in accelerating growth rate. The policy makers in this respect need to examine the report of the International Finance Corporation (IFC) of World Bank regarding desired changes in SMEDA for making it a very effective body for SME promotion and development.
There is a serious need for SME credit guarantee insurance without which the banks will not finance the sector as various schemes of the State Bank of Pakistan (SBP) have not achieved the desired results as banks are not prepared to take risk. It may be noted that SME Forum to be held on 19th August 2014 in Karachi to be attended by the stakeholders needs to impress upon the SMEs to modernize their farms, agricultural produce processing, manufacturing units and services. The best value addition could be done by SMEs and they need to be educated on the subject.
There is urgent need for incentives and it is very essential that industrial estates are established with in-house facilities for alternate energy generation and the land is allotted to the SMEs at concession and on installments.
The SME Forum will fail in its duty if it does not recommend duty free imports and financing of energy generation devises, raw and packing material and income generation vehicles, farm equipments, tractors, harvesters and other modern farm machinery.
Other aspects which need to be considered by the policy makers are the establishment of SME chamber of commerce, technological institute, export house, ombudsman for SME grievances, SME specific fund or bank, setting up of dehydration units and cold storage units near farms and logistic systems including collateral management.
Basically, the SMEs need conducive environment, educative information, technology, finance, incentives and marketing support for growth and the government is duty bound to cater to their requirements being the majority sector and the backbone of the economy. It is also the back forte of the large sector.