Global microscope on the microfinance business environment 2012

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■ Pakistan
Key characteristics of the microfi nance business
environment:
l Pakistan is one of the few countries in the world
that has a separate legal and regulatory framework
for microfi nance banks and is generally considered
to have one of the most enabling environments for
microfi nance regionally and globally.
l The State Bank of Pakistan (SBP, the central
bank) mandates that all microfi nance banks
educate their clients on the terms and conditions
of all their products and institutionalise a
procedure for dealing with client complaints. In
addition, the Pakistan Microfi nance Network
(PMN), a grouping of 23 of the leading players of
all institutional types, has developed a Code of
Conduct for Consumer Protection that promotes, in
addition to transparency in pricing, the dignifi ed
treatment of clients, and a commitment to
developing effi cient and effective complaint
resolution systems. Although voluntary, all
members of PMN have signed it, and the Pakistan
Poverty Alleviation Fund requires its partners to
adhere to the same Code.
l Branchless banking has shown impressive
growth in the last year. According to SBP, by the
end of December 2011, more than 929,000
customers have been registered as m-wallet users
and the number of transactions had risen to 20.6m
compared with 3.5m in March 2011. The
substantial growth in the sector has been the result
of positive regulatory changes that allowed the
network of agents to expand. As of December 2011,
there were 22,512 agents covering 86% of the total
districts, increasing by 14% in the fourth quarter
alone.
Key changes and impacts since last year:
l An amendment to the prudential regulations in
2012 now allows MFBs to make microenterprise
loans up to PRs500,000 (US$5,282) as long as
these loans do not represent more than 40% of the
bank’s total portfolio, and the bank needs to seek
SBP’s permission before engaging in this type of
lending.
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
l Recently, two provincial-level MFBs that had
been performing poorly were sold to new investors
and are likely to become nation-wide MFBs,
indicating that investment and transformation are
still considered good investments.
l The Securities and Exchange Commission of
Pakistan (SECP) has started to take a closer look at
the micro-insurance industry and has issued draft
regulations for micro-insurance in Pakistan.
l The credit information bureau pilot test has
been completed. The Microfi nance Credit
Information Bureau (MF-CIB) pilot operations are
continuing and funding has been secured to scale
it up nationwide. The MF-CIB will be a positive
registry (with information on all clients with an
outstanding loan rather than just defaulters) and
will cover all types of players serving the sector.
■ Philippines
Key characteristics of the microfi nance business
environment:
l The Bangko Sentral ng Pilipinas (BSP, the
central bank) continues to promote an enabling
environment for microfi nance, seeing it as one of
its key poverty reduction efforts.
l A number of public sector institutions (People’s
Credit and Finance Corporation, Small Business
Corporation, LandBank, Development Bank of the
Philippines, among others) provide wholesale
funds to support the sector’s growth.
l The industry remains relatively fragmented, as
there is no one dominant institutional type, set of
institutions, or network and multiple regulatory
and supervision regimes owing to the diversity of
the types of service providers.
Key changes and impacts since last year:
l Traditionally, the central bank defi ned
microfi nance loans below P150,000 (US$3,500). In
December 2011, BSP issued Circular 744 that
allows banks to offer the option of “Microfi nance
Plus” loans of up to P300,000 (US$7,000).
l A new law allowing foreign ownership of up to
40% in rural banks was passed by the House of