Finance Minister Senator Muhammad Aurangzeb has underscored the pressing need for innovative strategies to enhance financial inclusion in Pakistan. This was the focal point of a meeting held with the leadership of the Pakistan Microfinance Investment Company (PMIC), an organization established in 2016 under the National Financial Inclusion Strategy (NFIS) to promote financial access across the country.
During the meeting, the PMIC team presented a detailed analysis of the current state of microfinance in Pakistan. They highlighted the significant gap in financial inclusion compared to regional counterparts such as Bangladesh, India, and the Philippines. While Pakistan’s potential microcredit market consists of 41 million clients, only 7.4 million are currently served. This disparity reflects the country’s underutilized opportunities in the financial sector and the urgent need for scalable solutions.
Discussions explored the roles of Microfinance Institutions (MFIs) and Microfinance Banks (MFBs) within the ecosystem. MFBs primarily focus on providing loans secured by gold and extending nano-loans, whereas MFIs cater to rural communities and underserved populations, particularly women. Despite these efforts, substantial barriers hinder financial inclusion.
Among the challenges discussed were the complexities of a dual regulatory framework under which MFIs and MFBs operate, creating inefficiencies in the system. Additionally, limited access to funding remains a major hurdle, as the sector requires substantial liquidity to expand its outreach. The microfinance industry also faces a shortage of institutional capacity, with too few entities operating to meet the growing demand for financial services. Moreover, proactive measures are needed to achieve the ambitious targets outlined in the newly drafted NFIS 2024-28.
In response to these challenges, the finance minister urged the PMIC to develop innovative funding mechanisms. He proposed solutions such as equity endowment funds and targeted government-mandated allocations to increase the sector’s capacity and expand its outreach. Senator Aurangzeb reiterated the government’s commitment to financial inclusion as a cornerstone of sustainable economic development. He emphasized that practical and scalable solutions must be prioritized to address the unique challenges facing Pakistan’s financial ecosystem.
The meeting concluded with a shared resolve to work collaboratively toward improving access to financial services for rural and underserved populations. The minister commended the efforts of PMIC and its partners in identifying and addressing key bottlenecks in the system.
Led by Naveed A. Khan, Chairman PMIC, the delegation included Yasir Ashfaque, CEO PMIC; Waqas ul Hassan, CEO of Karandaaz Pakistan; and Saqib Siddique, Head of Portfolio & Sector Development, PMIC. Their contributions provided valuable insights into the operational realities of microfinance in Pakistan and the steps required to overcome current limitations.
With the government’s support and a focus on innovative solutions, the financial inclusion landscape in Pakistan is poised to undergo a transformation. This effort is expected to not only empower underserved communities but also contribute to the broader economic resilience and sustainable development goals of the nation.