Microfinance Institutions Performance in Pakistan

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Introduction

Poverty is the main problem of everywhere. For the last thee decades several developing and developed countries taken several steps to alleviate the poverty. In the world %??(how much %) people are living life below the poverty line their daily or monthly income is less than $ xxx(how much) . One main step is the establishment of Microfinance Institutions which are providing micro credits to the poor people without any collateral. The performance of these institutions is very attractive even some commercial banks also started micro financing on commercial basis.

Actually it is not possible for poor or low income people to gain credit from formal banking sector. Because they have no collateral and no security which is the basic requirement of formal banking. That is why in most countries poor people have no access financial services due to which these people cannot build up their income and assets and cannot come out from poverty cycle.

There are some informal financial alternate like moneylenders, family loans and traders are usually restricted to a limited amount, mostly inflexible. It is necessary to help the poor and provide them sustainable economic opportunities at gross root level.

MFIs provide credit facilities to poor people to start new business, improve micro or small business, house improvement loan, Employees loan, Livestock loan Agriculture loan to individuals and groups without any collateral. The amount of this loan in Pakistan is Rs 1,500/- to Rs 150,000/- equilent to 18$ to1800$. The terms and conditions are usually so common and easily available to everyone. e.g. Holding of NIC(National Identity Card), two years stay of individuals at their NIC address, age 18 to 58 years, crass ...

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...revenues. (Sagheer, 2005).

Abnon Haq assessed the financial performance of Pakistani micro finance organizations in 2008 using the statistics of top 5 banks, 6 micro finance institutions and 4 NGOs and RSPs. He concluded that the growth rate of Micro finance banks is good, and the NGOs and RSPs are satisfactory. However the Pakistani MFIs should concentrate both individual and groups lending moreover these organizations should also concentrate on saving deposits which may be a source of funds for these organizations. (Haq, 2008)

The reasons of the unexplored features of Microfinance especially in Pakistan is the limited number of academic studies, lack of comprehensive datasets and governess techniques (Hartarska, 2005). To explore this field we must investigate this field with maximum data more variables and several governess aspects and characteristics.

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