MICROCAPITAL BRIEF: Pakistan’s Khyber Pakhtunkhwa Provincial Government, Bank of Khyber (BOK) Launch $10 million Islamic Microfinance Scheme to Promote Employment for 550k Unemployed Workers in the Province

The government of the Pakistani province of Khyber Pakhtunkhwa province reportedly has committed a PKR 1 billion (USD 10 million) to an Islamic microfinance scheme to be implemented through the Bank of Khyber (BOK), a Pakistani bank that offers banking services and microfinance loans that comply with Islamic law by using concepts such as profit sharing in lieu of charging interest. Under the terms of the deal the bank will use the money to fund loans for entrepreneurial endeavors in an effort to facilitate the creation of employment opportunities for at least 550,000 unemployed persons in the province. It is reported that if the initiative is successful, the provincial government plans to make more investments in microfinance as well as establish an autonomous microfinance institution (MFI).

The announcement of the project follows a similar investment in 2012, in which the government allocated PKR 6 billion (USD 66.3 million) to microcredit. The loans financed under this project were primarily given to young artisans under the Bacha Khan Employment scheme, which offered interest-free loans starting businesses.

As at December 31, 2013, the Bank of Khyber (BOK) reported total assets of PKR 108 billion (USD 1.1 billion), total liabilities of PKR 12.6 billion (USD 126 million) and share capital of PKR 10 billion (USD 100 million).

By Hope Gitangu, Research Associate

About Bank of Khyber (BOK)

Bank of Khyber (BOK) is a Pakistan-based bank offering Islamic and conventional banking services and microfinance loans. The bank was established as a state-owned, regional bank in 1991 and was awarded status of a scheduled bank in September 1994. BOK launched its micro business development efforts in 1995 and its rural financial services in 1997 and focuses on providing access to financial services for low- income with specific emphasis on women. In January 2006, the bank had an initial public offering (IPO) of its shares at Karachi Stock Exchange. As of December 31, 2013, BOK reported total assets of PKR 108 billion (USD 1.1 billion), and a return on equity (ROE) of 10 percent.

Sources and Additional Resources

[1]Khyber Pakhtunkhwa Government launches Islamic Micro Finance scheme

http://www.samaa.tv/economy/21-Jul-2014/kp-govt-launches-rs-1bn-islamic-micro-finance-scheme

[2]MicroCapital Article, 26 May 2012: “MICROCAPITAL BRIEF: Microfinance Institution Akhuwat, Government of Punjab Provide Interest-free Loans of $11m in Interest-free Loans to Unemployed in Pakistan”

https://www.microcapital.org/microcapital-brief-microfinance-institution-akhuwat-government-of-punjab-provide-interest-free-loans-of-11m-in-interest-free-loans-to-unemployed-in-pakistan/#more-18896

[3]MicroCapital Article, 9 April 2012: “MICROCAPITAL BRIEF: Government of Khyber Pakhtunkhwa, Pakistan, Allocates $66m to Microfinance, Primarily for Youth, Artisans”

https://www.microcapital.org/microcapital-brief-government-of-khyber-pakhtunkhwa-pakistan-allocates-66m-to-microfinance-primarily-for-youth-artisans/#more-18198

[4]MicroCapital Universe Profile: Bank of Khyber (BoK)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Khyber+%28BoK%29

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