Kashf Microfinance Bank

Project Description

MIGA has issued guarantees totaling $1.74 million to ShoreCap International, Ltd. (SCI), Stichting Triodos-Doen (Triodos-Doen), and Triodos Fair Share Fund (TFSF), covering their equity investment in Kashf Microfinance Bank (KMB) in Pakistan. The coverage is for a period of up to 10 years against the risks of transfer restriction, expropriation, and war and civil disturbance.

The project involves the establishment of the Kashf Microfinance Bank in conjunction with the Kashf Foundation, a foundation which uses group lending to provide finance to the country’s poorest people. Kashf will transfer its individual lending portfolio (i.e., the upper end of microfinance in the local context) to KMB, as a base portfolio to the new bank.  KMB aims to reach significant scale quickly by offering savings and deposit products, individual loans, and other value-added services to micro and small business owners, especially women.

KMB intends to operate across Pakistan starting with branches in Punjab and Sindh, but expanding into Balochistan, Northwest Frontier Province, and Azad Jammu and Kashmir. Within five years, KMB expects to establish 100 branches and to have a loan portfolio of above $270 million equivalent to approximately 375,000 borrowers and over one million small depositors.

The project is expected to have a significant impact on the country’s economic development as it will be providing financing and savings instruments to small enterprises, which form the largest underserved, yet productive, segment of the local economy. As newer financial products are introduced, (savings, micro housing, micro-insurance, etc.) clients will have access to larger choice of financial products.  Greater access to financial services will help reduce poverty and expand economic opportunity for low income populations throughout Pakistan, especially women.

MIGA’s support in establishing a for-profit, national, and fully regulated microfinance bank will help demonstrate the profitability and sustainability of large-scale financial services to new microfinance providers. This will help encourage new entrants and greater overall penetration to meet the vast need for financial services for Pakistan’s poor. The project was underwritten through MIGA’s Small Investment Program.