The deposits maintained by microfinance banks have surged to over Rs. 400 billion for the first time, according to data released by Pakistan Microfinance Network. The deposits of the sector surged to Rs. 423 billion by the end of 2021 compared to Rs. 374 billion reported by the end of 2020, showing a substantial increase of nearly Rs. 50 billion in a year.
High profit rates offered by various microfinance banks attracted a good number of savers during the period, which gradually grew to 78 million in 2021 from 64 million at the end of 2020. The average amount of savings stood at Rs. 5,367.
The lucrative profit rates are instrumental for the microfinance sector in mobilizing deposits of handsome value and making investments in various avenues. On the other hand, it poses challenges to banks in maintaining the cost of operations at the same time.
The number of borrowers of microfinance banks and institutions surged to over 8.1 million across the country by the end of 2021 as compared to the number of borrowers, which stood at 7 million by the end of 2020, showing a healthy increase of 1.1 million new borrowers in one year, according to data released by Pakistan Microfinance Network.
The growth in the number of borrowers across the country showed the addition of new beneficiaries in the microfinance sector from various private or public sector financing schemes or campaigns offered by the microfinance banks or institutions.
The growth in the number of borrowers also indicated the recovery and resumption of small-scale businesses that either went into losses or completely shut down during 2020.
It is pertinent to mention here that a majority of the microfinance banks and institutions faced a tough time as the pandemic of COVID-19 hit the businesses and earnings of their borrowers, which ultimately affected the bottom lines of the overall sector.
According to an estimate, the loan default ratio of the microfinance banks stood at an alarmingly high level of nearly 5 percent, which was maintained at a level of less than one percent before the COVID-19 pandemic.
The branch network of the industry increased from 3,795 to 3,823 by the end of 2021. Akhuwat maintained the largest geographic footprint in the country by increasing its network to 102 districts, followed by Khushhali Microfinance Bank and Ubank, as each serviced 81 and 78 districts, respectively.