On a scale of 0-100, Pakistan scores 62.8, just behind top-ranked Peru's 67.8 and second-ranked Bolivia's 64.7 in overall global rankings of 55 countries. Among nations in South Asia region, India ranks 27 with a score of 43.1 and Bangladesh ranks 43 with a score of 30.9. Sri Lanka is at #48 with a score of 27.4 followed by Nepal at 51 scoring 26.1.
Among various categories, Pakistan ranks #1 in regulatory framework and practices and #5 in supporting institutional framework.
Here's an excerpt on Asia from the EIU report titled "Global microscope on the microfinance business environment":
"Pakistan and the Philippines again top the regional rankings for East and South Asia. These countries both finished in the top ten globally, signifying strong environments for microfinance. Indeed, Pakistan and the Philippines came first and second globally, respectively, in the Regulatory Framework and Practices category, suggesting strong regulatory regimes and good prospects for MFIs to enter the sector and perform effectively. The Philippines, for example, has had a strong enabling environment for microfinance for more than a decade. Cambodia is third best in Asia and makes it into the top 25% globally. India comes next, but fell precipitously after the crisis that struck the sector last year. Mongolia finished fourth in Asia, but was the region’s most-improved performer."
Recently, Pakistan's central bank governor Haris Anwar said that large segments the nation's population have no bank accounts and many do not understand why it puts them at a disadvantage when it comes to their personal financial management. According to Pakistan Access to Finance Survey (A2FS), only 12 percent of the population has access to formal financial services. Of the remaining 88 percent, only 32 percent are informally served and 56 percent are completely excluded, Anwar said, adding that according to the A2FS analysis, about 40 percent of the financially excluded population reported lack of understanding of financial products as the main reason for financial exclusion.
It has long been recognized by poverty alleviation experts that pursuing policies for increasing financial inclusion, such as encouraging microfinance, are absolutely essential to lift tens of millions of people out of poverty in Pakistan, where 50% of the workforce is made up of low-end self-employed. Other efforts toward bringing financial services to the poor and lower middle class in Pakistan include financial literacy initiatives and growth of branchless mobile banking in city slums and rural areas of the country.
Pakistan’s first-ever National Financial Literacy Program was launched earlier this year with the support and collaboration of Asian Development Bank (ADB), Pakistan Banks’ Association (PBA), Pakistan Microfinance Network (PMN), Pakistan Poverty Alleviation Fund (PPAF) and BearingPoint consultants.
The growth of branchless banking in Pakistan is now being held up a success story at international fora. Within a span of just two years, there are now almost 18,000 branchless banking outlets surpassing the 10,000 conventional bank branches, according to Governor Anwar. UBL Omni’s branchless banking service launched in April 2010 by United Bank has won several contracts to disburse payments for nongovernment organizations and government schemes to help those affected by floods. UBL reports that at the end of June it had 5,000 agents disbursing payments to 2 million recipients under these programs. UBL Omni has also started accepting loan repayments for microfinance institutions (MFIs) and providing cash management facilities for businesses.
According to a recent World Bank report titled "More and Better Jobs in South Asia" which shows that 63% of Pakistan's workforce is self-employed, including 13% high-end self-employed. Salaried and daily wage earners make up only 37% of the workforce. Access to money is necessary for many of these entrepreneurs to succeed in realizing their dreams.
The history of microfinance in Pakistan started with the launch of Orangi Pilot Project (OPP) in Kutchi Abadies (shanty towns) of Karachi in early 1980’s, according to a paper published by Abdul Qayyum and Munir Ahmed. In the late 1960s, prior to OPP, a few NGOs in the rural areas of Pakistan began to experiment with microcredit by offering subsidized loans. However, they mostly failed to reach the poor due to abuse and corruption. Now there are dozens of Micro Finance Institutions working in Pakistan. The MFIs in Pakistan can be divided into different groups based on their uniqueness that separates them from other financial institutions and makes them similar in terms of the way they function.
The first group consists of financial institutions with microfinance as a separate product line. The share of microfinance related activities of these institutions is up to 10 percent. This group includes Orix Leasing and the Bank of Khyber –both are profit making organizations and consider microfinance as a separate product line.
The second group refers to the specialized MFI’s, which includes two microfinance banks - The Khushhali Bank and First Microfinance Bank Limited (FMBL) - and two NGOs - KASHF Foundation and Asasah. All these institutions completely focus on provision of financial services and also have commercial focus as well.
Third category MFIs related to activities of the Rural Support Programs which deals with integrated Rural Development Programs with microfinance as one of its activities. These organizations are National Rural Support Programs (NRSP), Punjab Rural Support Programs (PRSP) and Sarhad Rural Support Programs (SRSP). The last group consists of private NGOs. These NGOs are basically integrated development organizations with microfinance as one of their activities. These include Orangi Pilot Project, Sungi Foundation, Taraqee Foundation, Development Action for Mobilization and Emancipation (TRDP), Sindh Agricultural & Forestry Workers Coordinating Organization (SAFWCO) and Development Action for Mobilization and Emancipation (DAMEN), among others.
Khushhali Bank was established in August 2000 as part of the Government of the Islamic Republic of Pakistan's Poverty Reduction Strategy. The Pakistan Microfinance Sector Development Program (MSDP) was developed with the technical assistance and funding of the Asian Development Bank, which provided a US$150 million loan to the government of Pakistan, US$70 million being used for micro-loans provided by KB. Headquartered in Islamabad, KB operates under the central bank's supervision (State Bank of Pakistan) with several commercial banks operating as its primary shareholders.
To broaden access, there are now efforts underway to offer Shariah-compliant microfinance products to those who are reluctant to participate in interest-based banking. Farz Foundation is among the first to do so. It is engaged in Islamic micro-financing for livestock and agriculture among the rural poor.
Pakistan has a long way to go to achieve financial inclusion for the majority of its population. The current efforts on increasing access to money for the poor are a good start on a long journey that may take decades to complete. My readers who are interested in helping the poor in Pakistan by offering small loans of $25 or more have a choice of many websites to do so, including kiva.org which I have been using. The loans to Pakistani recipients are administered through Asasah, a Kiva partner in the country.
Related Link:
Haq's Musings
Pakistan's Financial Services Sector
Fighting Poverty Through Microfinance
IBA on Entrepreneurship in Pakistan
Floods Dampen Enthusiasm on Pakistan Independence Day
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Here's Express Tribune on a book launch to increase financial literacy in Pakistan:
Blame it on either the absence of institutional support or a lack of eagerness on the part of the academia, the reality remains that business students in Pakistan had so far no textbook on banking and finance that described the complex relationship between the financial system and economic development in Pakistani context.
It was this academic vacuum that made Dr Shakil Faruqi write a two-volume book titled “Financial System and Economic Development – Pakistan,” which was launched at the Institute of Business Administration (IBA) on Monday in a ceremony chaired by IBA Dean and Director Dr Ishrat Husain and attended by IBA faculty members, students, economists and many former and current State Bank officials.
Formerly associated with the World Bank, Dr Faruqi has a PhD in economics from the University of Pennsylvania. He now teaches at the Lahore School of Economics (LSE), which is also the publisher of the two-part book.
Speaking on the occasion, former head of World Bank’s Learning Centre Tariq Hussain termed the book unique because it explained the theory of banking and finance by linking it to its actual application in the economy of Pakistan.
He said the chapters on Islamic finance discussed the issue in a purely academic manner. “It says what Islamic finance is and what it’s not. Also, it does this in an academic, rather than argumentative, way.”
Addressing the ceremony, Dr Faruqi said his students knew about the US Federal Reserve more than they knew about the State Bank of Pakistan (SBP) because the textbooks they used were by American authors. Saying that his students often complained finance was a dry subject, Dr Faruqi stated, jokingly, that his task was to make it as interesting as a Bollywood movie.
The first volume of the book has chapters on the financial system, interest rate, financial savings, credit system, Islamic banking, monetary management, etc. The second volume has chapters on the financial market, securities market, assets, yields, returns, trading in derivatives, capital market, long-term debt market, stock market, portfolio financing, etc.
The first and second volumes of the book cost Rs1,900 and Rs1,600, respectively.
http://tribune.com.pk/story/339368/vacuum-filled-textbook-on-banking-and-finance-launched/
Pakistan central bank to boost lending to stimulate economy, reports Bloomberg:
Pakistan’s central bank aims to spur lending to small companies, farming and housing in the next three years to boost growth in an economy where government borrowing has curbed credit and kept interest rates elevated.
“These three areas have to be stimulated and will become engines of growth,” Governor Yaseen Anwar, 60, said in an interview at the State Bank of Pakistan in Karachi on March 2. He forecast the economy will expand by 3 percent to 4 percent in the year ending June.
Anwar has kept the benchmark rate at 12 percent since he was officially made governor in October, refraining from adding to two reductions in 2011 as the nation grapples with the fastest inflation in Asia after Vietnam. He said government borrowing is impeding credit, as insufficient tax collections force Prime Minister Yousuf Raza Gilani’s administration to turn to central bank funding to finance flood rehabilitation and a war against militants in the northwest.
“The State Bank cannot do much in isolation without the government taking some very basic corrective measures,” said Nasim Beg, executive vice chairman of Arif Habib Investments Ltd. in Karachi, which oversees 35 billion rupees ($385 million) in stocks and bonds. “The government will be likely to go for aggressive populist spending early in this election year and worry about meeting revenue targets later -- more pressures for the governor.”
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Anwar, who worked at Merrill Lynch & Co. and Bank of America Corp. in his 33-year career before joining the State Bank, cited the government’s commitment to “zero borrowings” from the central bank as one of the reasons for reducing rates in July.
“We need attention on the revenue side in terms of tax reform,” Anwar said, adding he thinks the government may meet its collection target of 1.95 trillion rupees in the year ending June 30. The ratio of tax to gross domestic product, which the finance ministry estimates is 9 percent, “has to go up into the teens,” he said.
Only one in 10 Pakistanis pay taxes, limiting the government’s ability to fund a budget deficit that the International Monetary Fund estimates may widen to as much as 7 percent of gross domestic product this year.-----------
http://www.bloomberg.com/news/2012-03-04/pakistan-s-anwar-plans-lending-boost-to-bolster-economic-growth.html
Here's an excerpt from Express Tribune on rapid growth of mobile banking in Pakistan:
Sharing statistics of SBP, Anwar said value of branchless banking transactions reached Rs79,410 million during the last quarter. Total number of branchless banking accounts have increased to 929,184, he said, while branchless banking deposits have grown to Rs503 million.
SBP introduced branchless banking regulations in 2008. He further said around 80 million branchless banking transactions of Rs300 billion have been executed in Pakistan. “I am expecting a surge in the number of access points to over 50,000 very soon,” he said. Total volume (number) of transactions has jumped to 20.6 million during the October to December 2011, Anwar said. The average number daily transactions has increased to 228,855, he added.
The average size of branchless banking transactions, Anwar said, is Rs3,855 which shows that mobile phone technology and agent-based banking are providing financial services to unbanked poor.
While talking about the benefits of branchless banking, he said, rural customers will no longer be required to travel long distances. He further said a large proportion of population – which is unbanked – has been heavily reliant on cash-based transactions, thus causing a negative impact on documentation of the economy, the tax-base, efficiency of economic transactions, etc.
Representatives of the world’s leading software providers gave detailed presentations and discussed case studies on how mobile banking has succeeded in other emerging as well as developed markets.
Mobile banking is the only way forward, said Mathew Talbot, Senior Vice President, Mobile Commerce Sybase 365 – which was recently acquired by SAP. Pakistan is one of the fastest developing markets for branchless banking in the world, he said, which is why Sybase is here.
Sybase provides technologies to banks, which enable the latter to have full control of their bank accounts and make transactions through mobile device regardless of their location. It creates opportunities for bringing the unbanked and under-banked segments of the society into the financial network.
http://tribune.com.pk/story/350701/pakistan-rated-among-fastest-growing-markets-in-mobile-banking/
Here's an except of a microinsurance report on Pakistan:
Pakistan still needs a sustained effort to raise awareness amongst its people with regard to the benefit of insurance, followed by the delivery of insurance products to the poor. There is also great scope in Pakistan to diversify microinsurance products, for example, crop insurance. Indeed, there is a dire need of agriculture microinsurance: in case of natural calamities farmers have to bear the loss of their crop and face default on credit. The need to cover risk and investments of marginalised farmers is of paramount importance.
Existing microinsurance providers in Pakistan : (alphabetical order)
• AKDN Aga Khan Development Network
• BRSP Balochistan Rural Support Programme
• Development Action for Mobilization and Emancipation (DAMEN)
• Kashf Foundation
• NRSP National Rural Support Programme
• PRSP Punjab Rural Support Programme
• Sindh Agriculture and Forestry Workers Coordinating Organization (SAFWCO)
• SRSO Sindh Rural Support Organization
• SRSP Sarhad Rural Support Programme (SRSP)
• SUNGI Development Foundation
• TRDP Thardeep Rural Development Programme
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In Pakistan, serious efforts for microinsurance at the national level only picked up in the last decade with the advent of Microfinance institutions (MFIs) and a mushrooming growth of NGOs. However, there is still scope for extensive growth in this area. The Government has been doing its part by providing support to the RSPs through the creation of SMEDA (Small and Medium Enterprises Development Authority) and recently by the State Bank of Pakistan’s directive to all banks to have at least 20% of their branches in the rural areas. This will open up new avenues to infiltrate financing into crops, livestock and other basic requirements.
The government is also currently working on microfinance policy. It is involved in many social protection programmes, one of which is Benazir Income Support Programme (a cash grant programme being implemented nationwide and aiming to cover 3.5 million women during its first round).
The Planning Commission is also committed to organising roundtables workshops for gathering the viewpoints and perspectives of various experts and professionals for the development of the microinsurance policy.
Besides, the Asian development Bank (ADB) is also playing an important role in Pakistan in the microinsurance sector. From 2001-2008, the ADB had a $150 million Microfinance Sector Development Programme which included $80 million for on-lending, $40 million for social development and $20 million for community infrastructure. A more recent programme from 2006-2008 has been improving access to financial services of which one is microinsurance. A $20 million grant has been given to the Government by the ADB which will be administered through the State Bank of Pakistan over the next 2 decades.
The RSPN-Adamjee Health Microinsurance Model
The Rural Support Programmes Network (RSPN) was registered in 2001 under Pakistan’s Companies Ordinance (1984) as a non-profit company by the Rural Support Programmes (RSPs) of Pakistan. RSPN is a network of ten RSPs. The RSPs involve poor communities, mainly but not exclusively rural, in improved management and delivery of basic services through a process of social mobilization. RSPN is a strategic platform for the RSPs, providing them with capacity building support and assisting them in policy advocacy and donor linkages.
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The Adamjee-RSPN partnership started in 2005 – the very first health microinsurance scheme in Pakistan, providing hospitalisation and accident insurance to low-income rural population across the country who have organised themselves into community organisations (COs) fostered by the RSPs.
http://www.socialsecurityextension.org/gimi/gess/ShowWiki.do?wid=752
Telenor to offer agri info to farers via its wireless telephone network, reports newstribe:
Telenor Pakistan, in partnership with the Government of Khyber-Pakhtunkhwa, will provide agriculture and livestock information to farmers in the province.
In addition, farmers will be offered the Easypaisa platform to trade in agricultural commodities. Information will be provided via push SMS, voice recordings and small community gatherings.
The aim is to benefit farmers — especially small farmers — by providing them relevant and timely information, and the ability to carry out related mobile transactions on their handsets. All information will be provided by the Government of Khyber-Pakhtunkhawa while Telenor Pakistan will act as the distribution channel of the information. A pilot project will initially be run in Mardan district.
To mark the occasion an MoU signing ceremony was arranged at a local hotel. Arbab Muhammad Ayub Jan, Minister for Agriculture, Khyber Pakhtunkhwa was the chief guest. The MoU was signed by Roar Bjaerum, Vice President Financial Services, Telenor Pakistan and Arbab Muhammad Ayub Jan, Minister for Agriculture, Khyber-Pakhtunkhwa.
Roar Bjaerum, in his comments, highlighted the benefits the project will bring to the farmers of the province. “We will provide farmers the information they need to grow better crops and to raise hardy livestock. By doing so, we want to help them make more informed decisions when it comes to agriculture and livestock planning and trading. This way we hope to contribute toward alleviating poverty and empowering farmers economically. We will also offer mobile branchless banking solutions to enable farmers to carry out transactions right on their mobile phones through Easypaisa.”
Ayub Jan in his remarks spoke about the partnership between Telenor Pakistan and the Government of Khyber Pakhtunkhwa’s Agriculture, Livestock and Cooperative Department (ALCD). He said: “The Department has the mandate of promoting the interests of agriculture and livestock farmers in the province of Khyber Pakhtunkhwa. It has undertaken various initiatives to modernize the sector, and to augment the dissemination of relevant information to farmers to help increase production. Our partnership with Telenor Pakistan is another step in this direction. We are ready to offer all the support it needs to achieve its goals for this project.”
Small farmers, living in far-flung areas, are usually isolated from market information which may help them in dealing with commodity whole sellers (‘beopari’ and ‘arthis). They also do not have immediate access to information about best practices in agriculture and livestock rearing.
Telenor Pakistan’s project will help farmers in getting the information they need to increase yield through access to best quality commodities, latest agri trends, information on judicious use of pesticides and fertilizers, best breed of livestock, new methods of disease control, and quality feed and fodder.
http://www.thenewstribe.com/2012/04/18/telenor-to-partner-with-kp-to-provide-agri-information-to-farmers/
Citibank Pakistan recognized for corporate responsibility, reports Pak Observer:
Islamabad—Citi Pakistan has been awarded the ‘Best Community Program’ Award for its pioneering work in microfinance and vocational training at the International CSR Awards 2012. This award comes on the heels of two global awards that Citi Pakistan received at the Global CSR Summit and at the Asian CSR Awards in 2011, for its corporate citizenship initiatives in Pakistan. The bank has been focusing its programs on microentrepreneurship for vulnerable groups, including helping female entrepreneurs set up businesses. This is evidenced through the Citi Microentrepreneurship Awards (CMA) program which has been run in association with the Pakistan Poverty Alleviation Fund (PPAF) for the past (8) years through an annual grant provided by the Citi Foundation.
Now in 28 countries, CMA promotes the effective role that individual microentrepeneurs have made to the economic sustainability of their families as well as their communities. This year also marks the completion of Citi’s flood relief efforts in Pakistan to provide reconstruction and rehabilitation for affectees of the 2010-11 disaster. ‘This award is a solid recognition of our commitment to responsible finance in the country, particularly through meaningful microfinance and income-generation programs,’ said Aliuddin Ahmed, Acting Citi Country Officer for Pakistan. ‘Our community projects in Pakistan aim to create sustainable small-scale businesses with clear and measurable objectives and good process tools attached to all our social responsibility initiatives.’
The bank has had a continuous presence in Pakistan over the last 50 years and remains fully committed to serving its corporate clients and retail customers in the country, as well as fulfilling its role as a responsible corporate citizen. As it marks its 200thanniversary this year, Citi is considered to be the world’s global bank and a key partner-in-progress by public sector entities, top corporations and MNCs that operate in Pakistan and elsewhere in the region.
http://pakobserver.net/detailnews.asp?id=153685
Here's a BR story on State Bank governor encouraging Pak banks to finance SMEs:
KARACHI: Governor, State Bank of Pakistan, Yaseen Anwar has stressed upon the banks to give top most priority to SME banking with a view to ensuring uninterrupted flow of financial access to SME sector in the country.
Speaking at the signing ceremony of the project document between the State Bank of Pakistan (SBP) and Bank Alfalah under the DFID-funded Financial Inclusion Programme (FIP) at SBP, here Monday, he said the role of banks, especially of mid-tier banks, is crucial to ensure unhindered flow of financial resources to the SME sector which is the engine of economic growth in Pakistan.
"Though many banks in the market are trying to improve their market position in order to serve the sector more effectively, the current level of SME finance as well as an overall level of SMEs access to banking services remain unsatisfactory, and as such call for more serious efforts on part of the banks", SBP Governor added.
Anwar said that SME financing is very close to his heart due to its key significant contribution in the economic development of Pakistan. "The SME sector plays an important role in employment generation, poverty alleviation, and equitable distribution of resources and is the engine of growth", he added.
He pointed out there are 3.2 million economic establishments, of which 99% are SMEs, and SME sector represents over 90% of all enterprises and employs 75% of the non-agricultural workforce and contributes 30% towards the national GDP.
"However, despite its strong contribution in employment generation, exports, and national income, the SME sector is severely constrained in access to finance which is crucial for its growth", he added.
SBP Governor advised the banks to study the international examples of successful SME banking models which include Retail-based Model for Mass SME, Relationship-based banking, Advisory-based lending services, Segment-based Model, and Supply-chain linked Model.
Regrettably, he said that despite its immense significance and potential, the SME sector in Pakistan remains largely financially excluded, the current level of financing facilities to this sector stand at Rs 253 billion, constituting only 7% of the banks' total advances.
Anwar said that with the SBP- Bank Alfalah and International Finance Corporation (IFC) nexus, and the generosity of DFID, we can have more joint ventures of this sort in the future that would lead to a sustainable, sound and integrated financial system, characterised with ready access to finance, diversified loan portfolio and extended outreach to SMEs.
He said the State Bank, under the DFID-funded "Financial Inclusion Programme (FIP) will provide funding support to Bank Alfalah (BAF) in undertaking the IFC SME Advisory Project. "The main objective of the project is to create a symbolic podium which can position Bank Alafalah to cater to the financing needs of the SME sector including the S and M segments through a holistic banking and advisory services solution", he added.
SBP Governor said the SMEs need to be addressed through innovative credit assessment tools and techniques like credit scoring and capacity enhancement of the financial service providers, and an integrated approach to SME Banking. DFID and SBP are keen to upscale FIP to reach out the unbanked segments in Pakistan. Going forward, FIP funds will also be targeted to improve financial inclusion through SMEs banking, Anwar added....
http://www.brecorder.com/pakistan/banking-a-finance/61658-sbp-governor-asks-banks-to-give-top-priority-to-sme-banking-.html
Here's Pak Observer report on branchless banking growth in Pakistan:
Karachi—Branchless Banking is helping in reaching out to the low income, unbanked people through more than 30,000 access points throughout the country. Nearly 30 million transactions worth Rs.115 billion have been processed during the fourth quarter of the last fiscal year through branchless banking and the average daily transactions have been reported at 315,178 while the total number of branchless banking accounts has increased to 1.7 million. According to the World Bank’s Consultative Group to Assist the Poor (CGAP), Pakistan is the fastest growing branchless banking market in the world.
Addressing the journalists Deputy Governor, State Bank of Pakistan (SBP),Kazi Abdul Muktadi during his visit to Karachi Press Club today.
Expressing his resolve to provide banking services to all segments of the society, he said that with the concerted efforts of all, we will be able to achieve the desired goal of ‘Banking for All’.
Emphasizing the need for an efficient and thriving banking system, he said that the State Bank is providing regulatory environment to financial institutions to enhance financial inclusion in the country. ‘Providing people with access to finance is a challenging task, not just for the central bank but also for all the stakeholders,’ he observed.
State Bank of Pakistan is trying to make the banking services available at the door step of the people, he said and added that promoting access to banking services is the corner stone of SBP’s policy framework. He said the State Bank under its Branch Licencing Policy has made it compulsory for banks to open at least 20% of their new branches in rural and under-served areas.
Abdul Muktadir said the banking industry of Pakistan has tremendous growth potential to deliver lot more than what it is delivering right now. ‘The significance of e-banking and m-commerce cannot be overemphasized because of the fact that both have brought about remarkable changes in the ways people think and do their banking business today,’ he added.
The transformation from traditional to modern ways of banking is taking place at a fast pace. A number of alternate delivery channels for provision of banking services like ATMs, Credit Cards, POS terminals, Internet Banking, Debit Cards already exist in our country to benefit the masses. ‘Currently, 93% of the total bank branches are offering Real-Time Online services,’ he added.
Abdul Muktadir said the SBP would ensure that the high level of banking service standards is maintained for the safety, security and cost effectiveness with adequate levels of protection for consumers’ interests.
The SBP Deputy Governor, who also inaugurated an ATM at Karachi Press Club, pointed out that the availability of ATMs in Pakistan is quite low as there are only 5600 ATMs in the country. At present, there are about one ATM against two bank branches while in developed countries, there are three ATMs against one bank branch. SBP has recently issued policy instructions to all banks which bind them to expand their ATM network in a phased manner so as to achieve a target level of one ATM for each bank branch. ‘Once this target is achieved, we have plans to gradually raise the bar so as to meet the international levels.
http://pakobserver.net/detailnews.asp?id=177418
Here's a Wall Street Journal piece on health care in Pakistan:
Given the absence of comprehensive public health-care services, a largely unregulated private sector, with hugely disparate services and prices, has sprung up to fill the void. But currently only 0.8% of Pakistan's GDP is allocated to insurance products, including health insurance, according to the country's insurance regulator. Poor patients often end up taking out loans and falling into debt to pay for private-sector services.
To address such needs, Asher Hasan set up Naya Jeevan—"new life" in Urdu—a nonprofit micro-insurance program for the urban poor.
"Everyone should have access to quality health care irrespective of their level of income," said Dr. Hasan, who grew up between Karachi and the U.K. and then moved to the U.S. to study medicine.
Naya Jeevan, one of 12 finalists in The Wall Street Journal's Asian Innovation Awards, offers an insurance program at subsidized rates under a national group health-insurance model. It tied up with large multinational corporations and local companies to offer subsidized health-insurance plans for their low-income and contractual employees as well as the employees' domestic helpers, who are often poor.
Dr. Hasan's sales pitch to these companies was that health is a right and this is a way for the companies to help their low-income employees. For their domestic staff his pitch was: If a maid or a baby sitter of an executive fell ill, it would disrupt that executive's productivity in the office for as long as it took for the problem to be resolved.
But the program is under scrutiny from the country's insurance regulator, which comes under the jurisdiction of the Securities and Exchange Commission of Pakistan.
Mohammed Asif Arif, the insurance division commissioner at the SECP, said that Naya Jeevan is in violation of the country's insurance laws because it isn't registered as a broker and can't legally offer these products. The regulator issued a notice in September to insurance companies reminding them that it is illegal to sell insurance to unregistered entities. (Naya Jeevan buys insurance in bulk at discounted rates from several insurance companies.)
Mr. Asif Arif said his agency would allow Naya Jeevan time to comply with the rules, without offering a specific deadline.
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Dr. Hasan started Naya Jeevan with $75,000 that he won in 2008 in a New York University Social Entrepreneurship competition. Since then he has received funding from the International Labor Organization, USAID, the Asia Foundation, Google/Tides Foundation and J.P. Morgan Chase JPM +0.36% .
Naya Jeevan has locked in subsidized rates with a handful of Pakistani insurance companies. Under the agreements, it costs a company $1.50 a month per employee to enroll its lower-income employees and home helpers such as janitors, drivers and maids. Of this amount, at least 80% is typically covered by the company and the rest by the employee who is being covered. These employees also can enroll their families in the insurance program, at an additional monthly cost to them of up to $1.50 a person.
If a claim exceeds the amount of an individual policy, the balance of the cost is paid for by the individual's corporate employer. Naya Jeevan says 17,000 people are enrolled in its program.
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"One of the issues in society is that when you send in a low-income person to a gleaming fancy hospital, they may not get treated properly," even though their treatment is covered by the insurance program, Dr. Hasan said. To prevent that, Naya Jeevan works with doctors who can liaise with hospitals on behalf of their patients.
http://online.wsj.com/article/SB10001424052970204846304578090713421035962.html
Here's ET on increasing e-banking in Pakistan:
The overall value and volume of e-banking transactions throughout the country increased during the second quarter (October to December 2012) to Rs 7.6 trillion (18.02 per cent)and Rs 79.45 (11.31 per cent) million respectively, the State Bank of Pakistan reported on Wednesday.
State Bank of Pakistan’s Payment Systems report for the second quarter of FY13 released today revealed that the branches of 484 banks in Pakistan were added to the Real-Time Online Branches (RTOB) network during the second quarter of the current fiscal year (FY13) and now 94 percent branches are offering online banking services.
Calculating the overall internet banking services across the country, overall 9,896 branches of banks out of 10,523 are offering the service. During the second quarter, the overall value and volume of internet banking transactions had seen an increase in of 18.82 percent and 14.29 percent in the overall value and volume of internet banking from the first quarter of 2012, respectively.
The Payment Systems infrastructure in the country had also seen an increase because of the installation of 245 new Automated Teller Machines at banks around the country. Today, the number of ATMs across Pakistan has reached a total of 6,232. The report further said that ATM transactions had a major share of 61.12 percent in terms of transaction volume with an average value of Rs9,779 per transaction.
The overall e-banking transactions in value terms was 6.27 percent during the second quarter, increasing the value and volume of ATM transactions by 10.33 percent and 10.68 percent respectively in the second quarter as compared to the first quarter of the current fiscal year.
The report also said that over 20.72 million banking cards were issued in the country by the end of December, 2012, witnessing an increase of 5.33 percent in the second quarter compared to the preceding quarter.
Point of Sale (POS) terminals showed a growth of 6.25 per cent and 5.06 per cent in value and volume respectively as compared to the first quarter of the current fiscal year, with value and volume of transactions standing at Rs22.1 billion and Rs4.5 million, respectively, in the second quarter.
The report also pointed out an increase of large-value payments through Real Time Gross Settlement (RTGS) with 9.46 percent in value and 10.35 percent in volume as compared to the first quarter. The recorded value and volume was Rs42.13 trillion and Rs12.16 billion respectively in the second quarter.
The report also revealed that major portion for the increased number of overall Pakistan Real Time Interbank Settlement Mechanism (PRISM) transactions increased 14.06 percent during the same period, which was contributed by Interbank Funds Transfers (IBFT). Similarly, the value of overall PRISM transactions increased by 14.96 percent due to securities settlement.
http://tribune.com.pk/story/506723/e-banking-transactions-cross-rs7-trillion-state-bank/
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