BoP Plans to Acquire Strategic Stake in NRSP Microfinance Bank

Bank of Punjab (BoP) plans to acquire a strategic stake in The National Rural Support Programme Microfinance Bank (NRSP) Microfinance Bank from one of its major shareholders and a leading microfinance provider in Pakistan.

According to stock filing, the board of directors of Bank of Punjab has taken an in-principle decision to explore the possibility of acquiring a strategic stake in NRSP Microfinance Bank Limited from the Natural Rural Support Program together with any other shareholder of NRSP Bank interested in selling its shares to BOP.

The bank has targeted the majority shareholding of the National Rural Support Program (NRSP), having 57 percent stakes in NRSP Bank. Further, International Finance Corporation and PROPARCO hold 16 percent stakes in the microfinance bank. Acumen also owns 11 shares in the said bank.

BoP has entered into an MoU with NRSP, a microfinance provider in this regard. In the first step, the management of the bank, authorized by the board of directors, will get approvals from regulatory authorities to pursue its plan of purchasing shares in the microfinance bank.

The management of the bank will further proceed with an exercise of due diligence in the next step, a mandatory process before acquiring strategic shares in the microfinance bank.

The acquisition of the microfinance bank by a public sector bank will likely strengthen the synergy of both banking corporations, including its penetration, business, and quality of services.

NRSP Microfinance Bank Ltd. is one of the leading microfinance banks in Pakistan. It commenced its operations in March 2011. The bank is also privileged to be the 1st regulated provider of Islamic microfinance services in Pakistan.

The bank marked the highest ever profit of nearly Rs. 800 million in 2020. However, it could not sustain its profitability in the current year, incurring losses of over Rs. 950 million by the end of the third quarter of 2021, mainly due to prevailing challenges to the recovery of loans.

NRSP Microfinance Bank Ltd. is operating with 155 branches across 53 districts. Its assets stood at Rs. 50 billion, whereas the deposits values stood at Rs. 36 billion against the advances of Rs. 28 billion by the end of September 2021.