A delegation of Indonesian Central Bank in collaboration with State Bank of visited the Tando Allah Yar Branch of Khushhalibank, Pakistan’s Premier Microfinance Bank, in the district of Sindh on 26th January 2011. The delegation comprised of senior level members from the both the banks.

Pakistan is one of the successful countries in developing microfinance sector due to deep analysis of regulating framework for the microfinance organizations. Currently, there are over 1.8 million active borrowers in the country.

A recent publication of “The Economist Intelligence Unit” has released a report on the Global Microscope of the microfinance business environment 2010. According to this report Pakistan is amongst the top five countries globally and number one in terms of regulatory environment, number 20th in terms of investment climate and number 12th in terms of Institutional development.

To assess the viability of microfinance lending in Pakistan, the State Bank of Pakistan organised a study tour for the Indonesian Central Bank to visit the branch of Khushhalibank (KBL) in Tando Allah Yar and observe the current socio economic conditions of low income households in Pakistan and the successful running of micro financing. During the visit, the Indonesian delegation was briefed on the various microfinance facilities on offer by Khushhali Bank such as the loan utilization facilities and the intended benefits of microfinance to small farmers of rural areas. The group met with the clients of Khushhalibank and inquired about their farming activities, cropping patterns, loan needs, and group lending philosophy.

The KBL regional team informed the delegation of the latest trends and future directions of microfinance, the role of microfinance in the rural financial system and local economy development, and innovations in microfinance, specifically, the latest developments in empowering the rural population of Pakistan. The participants became acquainted with functions of microfinance organizations in Pakistan, and the various programs on offer to support small businesses in Pakistan.

It is expected that the Indonesian and Pakistani officials will use the new sharing of knowledge to further strengthen the legislative base of microfinance in both the countries. Ghalib Nishtar, CEO & President Khushhalibank, said “The visit allowed the Indonesian and Pakistani delegates to better understand the mechanisms of microfinance sector support, which is mutually beneficial for both the countries”. He further stated, “The visit has also helped the delegates to understand all advantages and necessity to create a better regulated microfinance sector in our countries”.