State Bank of Pakistan (SBP) organized a two-day workshop on Environmental and Social Risk Management in Microfinance in collaboration with World Bank which was attended by major players in the microfinancing sector of Pakistan including NRSP, Khushhali Bank, Kashf Foundation, PMIC, Telenor MFB, and many others.
The workshop, aimed at building the sector’s capacity to integrate environmental and social (E&S) considerations into lending activities, was conducted in anticipation of the rollout of the Financial Inclusion & Infrastructure Project (FIIP).
Project Director for FIIP, Asim Shahryar Husain, from Finance Division, welcomed the participants of the workshop and gave them an overview of the FIIP project. He mentioned that the FIIP project has three components. The first component is the direct support to the implementation of National Financial Inclusion Strategy (NFIS) which includes national payment gateway and digitization of G2P and P2G payments.
The second component is supporting the expansion of access points for financial services such as through digitization of CDNS which has more than 375 branches for savings deposits all over Pakistan.
And the third component is improving access to microfinance and financial services for microenterprises and SMEs with 60% loans for female borrowers.
This was followed by Ekaterina Grigoryeva, global focal point for E&S risk management for World Bank’s financial sector investments, presenting a business case for microfinance providers to fully integrate E&S considerations into lending practices.
Babar Naseem Khan from World Bank gave an overview of Pakistan’s National Environmental and Labor Regulations.
In the afternoon, Uzair from SBP and Ekaterina went through State Bank’s requirements for E&S risk management under the FIIP project and interacted with participants during case studies and group exercises.
On the second day of the workshop, Maida Zafar from Pakistan Microfinance Network (PMN) gave an overview of current E&S risk management practices in Pakistan’s microfinance industry based on the market research conducted by PMN.
In the afternoon, Syed Ali Imran, Chief Risk Officer of Khushhali Bank gave a comprehensive presentation on the ESMS experience of Khushhali Bank.
In the last session of the workshop, Ekaterina and Babar from World Bank talked about monitoring the effectiveness of ESMS and the importance of preparing annual E&S performance reports by microfinance institutions.
In the closing remarks, Project Director FIIP, Asim Shahryar Husain, thanked all of the participants and the speakers and hoped that the workshop will enable the participants to develop E&S policies and procedures at their own microfinance banks and institutions which is required to qualify for SBP’s line of credit for the FIIP project.
The workshop marked a milestone in scaling up the approaches to E&S risk management in the sector and building a level playing field for all microfinance institutions in Pakistan for E&S sustainability in their operations.