PMIC & Karandaaz Pak sign subordinate loan agreement
ISLAMABAD: Pakistan Microfinance Investment Company (PMIC) and Karandaaz Pakistan have signed a subordinate loan agreement under which Karandaaz Pakistan will provide PMIC with a subordinate loan of PKR 3.4 billion to be released in two equal tranches. The Subordinate Loan Agreement was signed by Ali Sarfraz, Chief Executive Officer, Karandaaz Pakistan and Yasir Ashfaq Chief Executive Officer PMIC in a ceremony held in Islamabad, says a Press release.
This agreement is envisaged to play an important role towards achievement of financial inclusion goals defined in the National Financial Inclusion Strategy (NFIS) and Microfinance Growth Strategy 2020. The subordinate loan will be leveraged by PMIC to raise more funds to meet the needs of the Microfinance Banks (MFBs) and Non-Bank Microfinance Institutions (NBMFIs) for larger funding lines with longer tenors. The sub loan will also increase per party exposure limit of PMIC and shall allow PMIC to lend more funds to its microfinance borrowers.
Speaking on the occasion, Ali Sarfraz, CEO Karandaaz Pakistan stressed on the importance of microfinance for the success of Pakistan’s National Financial Inclusion Strategy. “We are delighted of our role in establishing PMIC in 2016 with the financial support from UK’s Department of International Development and now to be further strengthening it through this subordinated loan for on-lending to microfinance institutions and microfinance banks. This additional capital that focuses on specific lending programmes will help PMIC in supporting more unserved and underserved microenterprises. We are hopeful that by increasing the access of finance to businesses, we will be able to achieve our development targets of more jobs and better incomes at household level.”
Yasir Ashfaq, CEO PMIC commented “As sector developer for the microfinance sector in Pakistan, PMIC is committed to meet the demand for financial services in the country especially for the marginalized and underserved segment of the society. We believe that this subordinate loan agreement with Karandaaz Pakistan will enable PMIC to focus on product innovation, especially for micro and small enterprises and job creation through our borrowing institutions (Microfinance Institutions and Microfinance Banks) and would accelerate financial inclusion in the country.”
Karandaaz Pakistan is supporting micro, small and medium enterprise sector in Pakistan and increasing access to finance for unbanked populations by leveraging digital technologies, developing and disseminating evidence based insights, and encouraging innovation in financial space. Karandaaz Pakistan has received funding from the United Kingdom’s Department for International Development (DFID) and the Bill & Melinda Gates Foundation (BMGF).
Pakistan Microfinance Investment Company Limited (PMIC) is registered as an Investment Finance Company under NBFCs regulations with Securities and Exchange Commission of Pakistan (SECP). It is setup jointly by, Pakistan Poverty Alleviation Fund (PPAF), Department for International Development (DFID) through Karandaaz Pakistan and the German Development Bank (KFW) to catalyze and lead the next phase of growth in the microfinance sector of Pakistan. The purpose of the Organization is to improve financial inclusion, employment and wellbeing of the poor by providing wholesale financing to the microfinance service providers in the country.