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KARACHI, Sept 20: The first private sector micro financing institution is being set up by two Aga Khan institutions with a capital base of Rs500 million and is likely to start functioning from November.
All ground work has been done, formalities completed and even a consent has been obtained from the State Bank of Pakistan for the chief executive and directors on the board of the Aga Khan Micro Finance Bank. The sponsors are now just waiting for the promulgation of the ordinance. The draft of the ordinance has been vetted, finalised and approved by the cabinet and it awaits signature of the President General Pervez Musharraf. Had the ordinance been promulgated on September 12, as was expected earlier, President Pervez Musharraf was scheduled to inaugurate this first micro finance bank in the private sector on November 12 at Islamabad. The incident which occurred on September 11 and the subsequent developments has temporarily halted the process of setting up of this micro finance bank, but sponsors are hopeful of things getting underway in due course and their institution would be functioning by the end of November. Two institutions - Aga Khan Rural Support Programme (AKRSP) and Aga Khan Fund for Economic Development - are contributing equal amount to the Rs500 million capital base which is the criterion fixed by the State Bank. Hussain Tejani, a banker with 32 years experience in the Bank of America now working in senior position in Habib Bank, is the proposed chief executive of the micro finance bank. All policies will be designed by a 12-member board of directors. Begum Akram Khatoon who was founder President of the First Women Bank with rich experience of offering credit services to women in poor localities in Karachi, Lahore and in rural areas is on the board. Other directors are Sajid Zahid and Sultan Allana. Other directors will come from the two sponsoring institutions. The sponsors have obtained prior consent of the State Bank for the nomination of chief executive and directors on the board. Once the ordinance is promulgated, the sponsors will move the papers in the State Bank and other regulatory institutions to complete the formalities within two months. "We plan to open 30 branches in first five years of our operations", Sultan Allana informed Dawn. He said that they were receiving demands for opening branches from various parts of the country and from the various localities. "We will be slow in first two years", he explained, pointing out that in these two years the focus of the management would be on developing and consolidating systems and procedures and internal training. "Once the management feels that it has acquired sufficient technical know how the country-wide operations will begin", he said. "While the bank will be offering micro-credit services to all communities our main target will be women and poor people", Allana said. At present, the sponsors of the Aga Khan Bank are in close consultation with the Khushhali Bank trying to share experience. One of the two sponsors, Aga Khan Rural Support Programme, has been offering micro-finance services in the remote northern areas of Gilgit, Baltistan and Chitral since 1982. Considered to be one of the most difficult geographical terrain of the country that is spread over 74,000 square miles with a population of one million, whose per capita income is much less than the national average, the AKRSP claims to have already reached 80 per cent of the population. "There are now few opportunities to expand operations", a write-up on the operation review of AKRSP says. In the year 2000 the number of borrowers were 21,717 down from 34,081 in 1998. Its average performing assets amount to Rs565 million in 2000 as against Rs326 million in 1998.
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