KARACHI: The number of active microfinance borrowers increased 20 per cent year-on-year to an all-time high of 8.2 million at the end of the July-September quarter.

According to the latest data released by the Pakistan Microfinance Network (PMN) — the national association for retail players in the microfinance industry — as many as 161,318 customers joined the ranks of active borrowers in the third quarter of 2021, up 2pc from the preceding three-month period.

Speaking to Dawn, Mobilink Microfinance Bank CEO Ghazanfar Azzam called the 20pc expansion in the number of borrowers “less than satisfactory” given the large size of the potential market.

PMN estimates that the microfinance outreach or penetration rate was 39.9pc at the end of September. This means six in every 10 potential customers in the country still can’t access microfinance.

“We’re at 8.2m borrowers in 20 years. Growing at this pace will take us another 25 years to reach every potential customer. I think we should grow 40-50pc a year consistently,” he said.

In the July-September quarter, the microfinance provider with the highest number of active borrowers was Mobilink Microfinance Bank (2m), followed by Khushhali Bank (838,789) and Akhuwat Islamic Microfinance (764,287).

The gross loan portfolio (GLP) amounted to Rs365 billion, up 2.8pc from a quarter ago and 18pc from a year ago. Khushhali Bank was the biggest player in terms of the GLP as its asset book had outstanding microcredit of Rs68.2bn. It was followed by First Microfinance Bank (Rs50.5bn) and Mobilink Microfinance Bank (Rs34.9bn).

The number of active savers increased to 72.5m, up 3.1pc from a quarter ago and 24pc from a year ago. The value of total savings grew to Rs384bn, up 1.4pc and 20pc on a quarterly and yearly basis, respectively.

Growth in the number of active savers was driven by Mobilink Microfinance Bank’s m-wallets, which increased by 1.8m during the period. The rise in savings was led by Ubank. M-wallets held 81pc of the total depositors with 14pc of the total value of deposits. The remaining 19pc of the depositors used traditional branch banking accounts with 86pc of the total deposits.

As for the number of active savers, Mobilink Microfinance Bank (37m) led the sector with Telenor Microfinance Bank (21.8m) and National Rural Support Programme (3m) trailing behind.

The average loan size grew from Rs17,320 to Rs23,846 on a quarterly basis as the number of loans disbursed decreased 29.1pc owing to the “seasonal variation”. Credit risk, indicated by the portfolio-at-risk or loans that have been outstanding for more than 30 days, increased from 5.2pc to 5.9pc.

This is despite the fact that the State Bank of Pakistan (SBP) had launched its debt relief scheme to help small borrowers of the microfinance sector survive Covid-19 that intensified in March 2020.

According to the SBP, major beneficiaries of its debt relief scheme were individual borrowers, especially the ones who had taken out loans from microfinance players. Microcredit providers “significantly supported” their 1.7m small borrowers by extending the repayments on loans of up to Rs121bn. SBP statistics show the approval rate for the applications from micro-borrowers requesting debt relief remained 98.9pc until the end of the scheme on March 31, 2021.

“The microfinance industry should aim to increase the market penetration rate from about 40pc to more than 50pc within a couple of years,” said Mr Azzam.

Published in Dawn, November 21st, 2021