MICROCAPITAL BRIEF: Standard Chartered Bank Pakistan Closes First Microfinance Deal, $4.2m to Kashf Foundation

Standard Chartered Bank Pakistan Ltd, a subsidiary of Standard Chartered PLC, has closed its first microfinance deal, a two-year term loan to Kashf Foundation worth PKR 350 million (USD 4.2 million). The deal is supported by the Program for Increasing Sustainable Microfinance (PRISM), a project launched by the Pakistan Poverty Alleviation Fund (PPAF) to assist microfinance institutions (MFIs) forge partnerships with commercial funders.

According to a statement released by Standard Chartered, this loan “will allow Kashf to meet its funding requirements and expand its customer base to increase access to finance… It also promotes commercial lending to microfinance institutions and encourages them to further improve operationally and to become self sustainable.”

Including this deal, Standard Chartered has provided over USD 385 million in loans to MFIs in 16 countries in Africa and Asia.

By: Stefanie Rubin, Research Assistant

About Standard Chartered PLC:

Standard Chartered was formed in 1969 through a merger of two banks: The Standard Bank of British South Africa, founded in 1863, and the Chartered Bank of India, Australia and China, founded in 1853. The bank has over 1,600 branches in over 70 countries. Since the 1990’s, Standard Chartered has focused on developing its franchises in Asia, Africa and the Middle East.

As of 2008, Standard Chartered had extended USD 385 million in loans to 52 microfinance institutions, with an average loan size of USD 7 million.

About Kashf Foundation:

Kashf Foundation began in 1996 as a research program, which focused on the demand for microfinance services by poor women. According to the MIX Market, the microfinance information clearinghouse, as of 2008 Kashf Foundation had a gross loan portfolio of USD 44.2 million, 313,512 active borrowers, total assets of USD 63 million, a return on assets (ROA) of -16.71 percent and return on equity (ROE) of -59.33 percent.

About the Program for Increasing Sustainable Microfinance (PRISM):

The Program for Increasing Sustainable Microfinance (PRISM) was launched by the Pakistan Poverty Alleviation Fund (PPAF) in 2008. PRISM’s main objective is to assist Pakistani microfinance institutions that largely rely on donor funding in forging new partnerships with commercial funders. The PRISM program has an operating budget of USD 45 million, and involves partnerships with 72 organizations working in 33,000 villages. In addition to government support, PRISM was financed by a USD 35 million loan from the International Fund for Agricultural Development (IFAD).

About the Pakistan Poverty Alleviation Fund (PPAF):

The Pakistan Poverty Alleviation Fund (PPAF) is a government program, established in 2000 with USD 100 million in funding from the World Bank and the Pakistani government. PPAF provides loans, grants, and technical assistance to microfinance institutions across the country. Support of the microfinance sector is part of a broader strategy of poverty alleviation that includes drought mitigation, education, and health interventions. At the end of FY 2007, PPAF had PKR 5.6 billion (USD 80.4 million) in accounts receivable from lending activities supporting microenterprise development. PPAF had total assets of PKR 18.4 billion (USD 264.2 million), a return on assets of 5 percent and a debt to equity ratio of 376.19 percent.

Additional Resources:

Standard Chartered Bank Sustainability Data: http://www.standardchartered.com/sustainability/data-trends/en/index.html

Kashf Foundation: http://www.kashf.org/site_files/default.asp

MIX Market: Kashf Foundation: http://www.mixmarket.org/mfi/kashf/data

MicroCapital Universe: IFAD: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Fund+for+Agricultural+Development+%28IFAD%29

MICROCAPITAL STORY: Pakistani Government Agency PPAF (Pakistan Poverty Alleviation Fund) Launches USD $45 million PRISM (Program for Increasing Sustainable Microfinance): https://www.microcapital.org/microcapital-story-pakistani-government-agency-ppaf-pakistan-poverty-alleviation-fund-launches-usd-45-million-prism-program-for-increasing-sustainable-microfinance/

Source Article:

Standard Chartered Bank Pakistan Limited closed its first Microfinance deal in December 2009. The landmark deal is a 2 year, PKR 350,000,000 (approximately USD 4.2 million) term loan to KASHF Foundation. KASHF is a leading Microfinance Institution and a recognized industry pioneer in the country with more than 150 branches and 300,000 active borrowers.

The deal is supported by the International Fund for Agricultural Development (IFAD) sponsored Program for Increasing Sustainable Microfinance (PRISM) in collaboration with Pakistan Poverty Alleviation Fund (PPAF). PRISM is a program which provides financial and technical assistance for Microfinance Institutions. It also includes a credit enhancement facility to enable top MFIs to access commercial lending. The facility to KASHF has been secured by a 70% Cash Deposit from the PRISM program.

Standard Chartered Pakistan’s loan is a big help to KASHF Foundation and to the country’s microfinance sector especially in the current economic environment. It will allow KASHF to meet its funding requirements and expand its customer base to increase access to finance for the large untapped and deserving clientele in Pakistan. The new loan is expected to benefit 20,000 people. It also promotes commercial lending to Microfinance Institutions and encourages them to further improve operationally and to become self sustainable.

With the completion of the Microfinance deal in Pakistan, Standard Chartered’s Microfinance business has now provided funding to 16 countries in Asia and Africa and strengthens the Bank’s continuing commitment to the sector.

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