Introduction to SME, Micro finance & KhushhaliBank Limited

1. Introduction to SME, Micro finance & KhushhaliBank Limited By: Syed Imran Ali Shah Area Manager – Khushhalibank ltd

2. What is SME Definition? Small & Medium Enterprises are defined as follows, as approved in SME Policy 2007 Loan limit 0.5M - 75M (Collateralized) The Federal Government, in line with the economic development of Pakistan may, from time to time modify the eligibility criteria as it sees fit. All providers of services receiving funding from the Government may define more narrow scopes for specific targeting purposes.

3. What is Microfinance? • Microfinance • Banking for low income individuals or groups who would otherwise have no other means of gaining financial services • The goal of microfinance is to provide a means of, • Saving money • Borrowing money • Insurance • Remittances • Microsavings • A branch of microfinance, consisting of a small deposit account offered to lower income families or individuals as an incentive to store funds for future use. • The minimum balance requirements are often waived, or very low, allowing users to save small amounts of money.

4. Microfinance • Microcredit • A small loan given to poor people to help them become self employed.  • Also known as "microlending" or "microloan".  • Microinsurance • A division of microfinance, microinsurance looks to aid poor families by offering insurance plans tailored to their needs.

5. Impact of Microfinance

6. Microfinance Industry Overview • Microfinance Institution (MFI): • A non-bank, non-government organization (NGO) • Registered under a variety of regulations including the Societies Act, the Trust Act, and the Companies Ordinance. • BRAC-Pakistan and ASA-Pakistan. • Microfinance Bank (MFB): • A commercial bank licensed and prudentially regulated by the Central Bank of Pakistan. • Licensed under the Microfinance Institutions Ordinance, 2001. • Legally empowered to accept and intermediate deposits from the public. • Rural Support Programme (RSP): • Also an NGO registered as a non-profit section 42 company under the Companies Ordinance. • Purely rural focus of its credit operations. • Registered with and supervised by the Securities and Exchange Commission of Pakistan (SECP).

7. Research indicates that Microfinance Programmes work best when targeted at populations just below and above the poverty line Transitory Non-Poor and Vulnerable Those people who live above the poverty line Transitory Poor Those people who live below the poverty line for most of the time, but not always Extremely and Chronic Poor Those people who always live below the poverty line, all the time Customer segments

8. MICROFINANCE BANKS IN PAKISTAN Microfinance Bank licensed and prudentially regulated by the State Bank of Pakistan to exclusively service microfinance market Advans Pakistan Microfinance Bank Apna Microfinance Bank Ltd. (formerly NMFB) Kashf Microfinance Bank (KMFB) KhushhaliBank Limited National Rural Support Programme Bank Ltd. (NRSP Bank) Pak-Oman Microfinance Bank Ltd. (POMFB) Rozgar Microfinance Bank Ltd. (RMFB) Tameer Microfinance Bank Ltd. (TMFB) The First MicroFinanceBank Ltd. (FMFB) Waseela Microfinance Bank

9. Rising Capital for Small, Medium & Micro Entrepreneurs Why too many Entrepreneurs don’t know how to raise Capita? Regardless of sector or size, companies wanting to expand sales, production and profits must have funds to hire people, buy equipment and acquire larger facilities. And much of that capital will come from credit financing. • Tools & Resources • Register as limited company • Design your company logo • Find cash flow solutions • Get business card designed & printed • Find an account • Find office premises • Raise finance from Institute

10. Rising Capital for Small, Medium & Micro Entrepreneurs Microfinance: Micro-enterprises and small businesses account for the major share of the private sector and employment in many developing countries. Yet, despite their size and importance, these businesses rarely have access to the savings, credit, and payment services provided by formal financial institutions. However MFBs in Pakistan are the specialized institutes who are facilitating to micro enterprises up to a maximum of Rs. 500,000/- with easy procedure. The MFB shall extend the enterprise loans only in the name of micro entrepreneur to ensure traceability and reduce the incidence of multiple borrowing.

11. Pakistan’s first Microfinance Bank Established in August 2000 as part of government of Islamic Republic of Pakistan’s poverty reduction strategy and its Micro Finance Sector Development Program (MSDP Pakistan’s largest Micro Finance Bank in terms of outreach Footprint of 110 branches Khushhalibank Limited

12. KBL Role • Retailing microfinance services nationwide. • Pivotal to building a conducive environment to attract other MFIs. • Provide NGOs a platform to evolve/strengthen their respective specialist functions.

13. KBL NetworkPunjab 68Sindh 24Balochistan 3NWFP 12AJK 03

14. KBL Update as of 30th June-2013

15. Liability Suite Current Accounts Savings Account Term Deposits Asset Suite Individual Loan ( Secured) Group Loan ( Unsecured) Value Chain Financing Other Services Western Union Money Transfer Repayments at Omni Dukaans • Products & Services

16. Lending Suite • Khushhali Cash Sahulat • (Asset backed lending for Individuals) • Khushhali Qarza • (Unsecured Group Lending)

17. Description Offered to borrower groups including 5 to 20 people for enterprise, livestock or agriculture purposes Social collateral ( Grameen Model) Target Segment Geared towards fulfilling small financing requirements for our rural and urban customers. Loan Ticket Rs 10,000(Min)- Rs 50,000(Max) APR 31% (Charged on outstanding balance) Types of Loan Agri Livestock Enterprise Repayment Options EMI (Equal Monthly Installments) Bullet Tenure 3-12 months Credit Life Insurance (Mandatory) Free Khushhali Qarza

18. Description Collateralized loan to individual customers Collateral includes Gold, National Savings Certificates (NSC's) and Khushhalibank TDs Target Market Urban and Rrural Slightly larger businesses Loan Ticket Rs 25,000(Min) - Rs 150,000(Max) APR 28% against Gold 25% Land Backed/passbook 15% against liquid securities Types of Loan Agri Livestock Enterprise Repayment Options EMI(Equal Monthly Installments) Bullet Tenure 3-12 months Free Life Insurance of outstanding balance Khushhali Cash Sahulat

19. Liability Suit

20. Current Deposit Account CDA is an excellent transactional account for Individuals with frequent transaction needs & small business owners Minimum balance requirement is Rs. 500 and account can be opened with Rs. 100 Basic Banking Account BBA is also targeted towards the mass market with frequent transaction needs Minimum balance requirement is ZERO and account can be opened with Rs. 1000 Current Account

21. Mehfooz Account Targeted towards small savers, households, KBL borrowers No minimum monthly balance or monthly average balance requirement Interest Rate, 6% per annum Karobari Munafa Account Targeted towards small business owners Minimum balance requirement is Rs. 5,000 and account can be opened with Rs. 500 Interest Rate, 6% per annum Behtreen Bachat Account Targeted towards elderly savers, investors and pensioners Minimum balance requirement is Rs. 25,000 and account can be opened with Rs. 5,000 Interest Rate, 6-8% per annum depending upon amount of deposit Savings Account

22. Saving Accounts Strengths

23. Khushhali Aamdani Certificate (KAC) Pays out profit at the end of the specified tenure i.e at maturity. Designed for customers with strong savings who are looking for higher rate of return Min Deposit Requirement is Rs. 5,000/- Tenures of 1,3,6,12,18,24 and 36 months Issuable in multiples of Rs. 1,000 and Khushhali Izafa Certificate (KIC) Pays out interest on a monthly basis Designed for customers with strong savings who are looking for higher rate of return Min Deposit requirement is Rs. 25,000/- Tenures of 6,12,18,24 and 36 months Issuable in multiples of Rs. 1,000 Term Deposit

24. KBL TDC’s Strengths

25. Other Services • Western Union Money Transfer facility is provided in all 107 branches. • Approx. 1,000 txns per month • Benefits • NFI • Cross-sell opportunity • Brand Equity enhancement • Loan repayment through OMNI Dukaans mapped on all KBL branches • Over 500 Agents on board accepting repayments • Benefits • Transactional convenience • Increased outreach

26. Employment career for post graduates in Khushhalibank ltd. Eligibility criteria for recruitment Education: Min Graduate (BA, B.Com, BBA, BPA or equalant) Age: 28years max Gender: Equal opportunity for both Exp: Experience in Relevant field’ll be preferable/Fresh graduate are encouraged to apply

27. Employment career for post graduates in Khushhalibank ltd. Field & Career Considering nature of business we offer field & office based jobs in initially three caders Entry Level: BDO (Business Development Officer) for field based permanent officer job Job Description: Sale & Recovery of loan products (Credit Portfolio) Entry Level: Operations Officer for back-office function permanent officer job Job Description: Responsible to execute back-office functions smoothly i.e Cash dealing, Client Servicing, Transfers, Clearing, A/C Opening etc. Entry Level: Sales Consultant, field based job for deposit mobilization Job Description: Responsible to mobilize deposit from market.

28. Thinking about change helps us believing in ourselves, and enables us to make plans bigger than our existing circumstances. But when it comes to the womenfolk in Pakistan, all their plans become more difficult to realize as compared to the male members of the society, unfortunately. In the most of the underdeveloped areas, women have to struggle more for everything starting from developing an identity of their own to getting themselves established financially.The story of Ms. Fareeda, resident of Sukkar, is no exception. Her father was the only bread earner of her family. He was in trouble making ends meet. That lack of resources prevented her and her siblings from joining school or any vocational institution thus perpetuating the vicious cycle of deprivation and lack of means to improve their life.However, one thing distinguished Ms. Fareeda from the average women. She had a strong resolve to support her family and to give them a chance for building a brighter future free of any financial worries. This led her to a decision of starting her own embroidery business.With no formal education, Ms. Fareeda’s decision was a difficult task to accomplish. On her way to success, she faced implications like social and domestic backlash and contending with lack of resources. Putting aside all her inhibitions, she contacted Khushhalibank, the pioneer bank in microfinance, for financial assistance. Khushhalibank responded Ms. Fareeda’s request with not only the initial finances to enable her for starting embroidery business but also gave her the best possible financial and business advisory to run her business smoothly.Now with the support of Khushhalibank, Ms. Fareeda is running her embroidery business successfully with plans for expansion on a commercial scale, thus gaining access to urban and rural markets. Ms. Freeda has become a successful entrepreneur who is a role model for other members of the society at the same time. She is also teaching the art of embroidery to women of the area for helping them changing the course of life for their families.

29. IBA Scholarship Program

30. Q & A

31. Thank You