Microfinance as a sector is increasingly being pulled and shaped in different positions. From Telenor selling its bank, to Bank of Punjab announcing its plans to acquire a strategic stake in NRSP all has added to speculations about the economic feasibility of operating a bank in the segment.
Telco players like Jazz are trying to explore additional avenues to consolidate in their existing financial service models while commercial banking players like HBL, which has recently rebranded First Microfinance Bank to HBL Microfinance Bank, are solidifying their grip on existing investments.
Amidst all the changes happening within the sector, the question arises whether microfinance banks are commercially viable for the investors or are there other strategic motives for operating in the market?
Pakistan’s microfinance industry
The objective of microfinance is similar to that of microcredit; its goal is to provide financial services to help encourage entrepreneurs in impoverished nations to act on their ideas and obtain the financial tools available to do so and to eventually become self-sustainable.