KARACHI: The disbursement of microfinance loans increased 13.7 per cent in April-June on a quarterly basis after flat-lining in the preceding three-month period.

Micro-loan disbursals in the second quarter of 2022 totalled Rs153.1 billion, up from Rs134.7bn in the first quarter of 2021, the latest data released by the Pakistan Micro­finance Network (PMN) shows. However, the increase was 38.5pc on a year-on-year basis.

According to the commentary by the PMN analysts, despite political and economic uncertainty, the microfinance sector posed resilience as a majority of indicators witnessed growth.

The double-digit increase in disbursements came alongside a 7.5pc increase in the gross loan portfolio (GLP), which amounted to Rs448.6bn. Loan disbursements are fresh credit extended in the three-month period while GLP accounts for the entire outstanding principal owed by existing clients. GLP increased 26pc on a year-on-year basis.

Mobilink Microfinance Bank remains at top of active borrowers’ list

Mobilink Microfinance Bank continued to lead the list of active borrowers, followed by Khushhali Microfinance Bank, Akhuwat Islamic Microfinance and ASA Microfinance bank. The portfolio of microfinance banks was Rs340bn while that of non-bank microfinance companies remained Rs108bn.

The number of active borrowers of microfinance banks was 5.4 million while those of the non-bank microfinance companies was 3m. Khushhali Microfinance Bank is the largest provider of microcredit among microfinance banks, followed by HBL Microfinance Bank, Mobilink Microfinance Bank and U Bank.

Akhuwat Islamic Microfinance is the largest contributor to the gross loan portfolio of non-bank microfinance companies, followed by National Rural Support Programme and Kashf Foundation.

The microfinance industry disbursed 5.4m loans in the three-month period under review, up 3pc from the preceding quarter.

There were 8.4m active borrowers at the end of April-June, up 3.5pc from the number of borrowers at the end of the preceding quarter. The average loan size in April-June grew 10.3pc to Rs28,270 from Rs25,629 in the preceding quarter.

The State Bank of Pakistan has now allowed microfinance banks to disburse small business loans of up to Rs3m. This is expected to result in an increase in quarterly disbursements and the overall average loan size. Unlike in the past, microfinance banks are now actively financing tractors and other commercial vehicles and extending long-term loans for affordable housing.

The ratio of early delinquencies — loans more than 30 days overdue — slightly deteriorated from 4.3pc at the end of March to 4.5pc at the end of June.

As for micro-savings, the number of active savers remained 86.7m, up 2.9pc on a quarterly basis.

The value of savings stood at Rs391.1bn at the end of June, down 8.9pc from a quarter ago.

The microfinance penetration rate — which shows the share of the relevant population that has used microfinance products at least once in their lifetime — was 41.3pc at the end of June versus 40pc a quarter ago. This means six in every 10 potential customers in the country still can’t access microfinance.

Published in Dawn, October 9th, 2022