A 2 percent point descend was witnessed in the share of the Khushhali bank Limited in the microfinance market. Despite this drop, the president of the Bank, Ghalib Nishter seemed positive as he believed that there was still 90 percent market in the micro-loan category that needed to be served as there was still opportunity to tap the healthy and growing sector. “To date, around 2.8 million active borrowers have benefited, which constitute only 10% of the microfinance market,” he said.
Khushhali bank was the first bank in Pakistan to offer micro-finance loans back in 2000, which is why it is still the market leader with an increase in revenues by 27 percent in this year. This supported the net profits, which improved to Rs168 million, up 11% compared to 2011. The president of the bank authenticated this growth to improved non-fund income, product diversification and recovery of bad debts, which emerged after successive floods in the country. Mr, Ghalib termed the years of 2010 and 2011 to be the toughest years for the micro-finance sector due to the emergence of floods, which badly affected the bank’s operations in rural areas.
With the aim of conquering the market, Khushhali bank has widened its product lines with a main focus to target rural areas of Pakistan. By doing so the bank would be able to drive into different sectors of the society enabling it to increase its market share.
Khushhali Bank offers loans in the range from Rs10,000 to Rs150,000 to people in the rural areas of Pakistan who are willing to start small scale businesses. The Band broadened its product line by launching a micro-enterprise product, allowing a borrower to secure loans up to Rs500,000. Though interest rate for these loans stands at a high around 31%, but the bank claims that the figure drops to 17% by applying the Reducing Balance Method.
The consumers find the process of the bank of taking money back from consumers very convenient. According to Tasleem Shahid who is a resident of Lahore: “The friendly behaviour of bank staff encouraged me to apply for another loan, now I am earning around Rs20,000 from my small shoe-stitching business,”