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| NRSP MFB |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 28231 |
| Company name | NRSP Microfinance Bank Ltd. |
| Country | Pakistan |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pend FAP |
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| Date SPI disclosed | June 24, 2009 |
| Projected board date | September 15, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Pakistan, has over 160 million people with 41% of the population living below the poverty line(>$2/day). The financial sector penetration is very low in Pakistan with only 3.5% of the population having access to credit. Furthermore, financial service providers mainly operate in the urban areas leaving 66% of the population (located in rural/remote areas) without access to finance. With a 6.3% market penetration, there remains an enormous unmet demand in a microfinance market of 28 million potential clients
The project consists of a transformation of National Rural Support Programme’s (NRSP) microfinance loan portfolio into NRSP Microfinance Bank (MFB) through an IFC equity investment and linked Advisory Services package. |
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| Project sponsor and major shareholders of project company |
The project sponsor is NRSP. It was established in 1992 and is a company limited by guarantee registered under section 42 of the Companies Ordinance. NRSP is the largest MFI in Pakistan with approx. 28% market share and with a unique mission of serving rural clients and providing agriculture finance. As of December 2008, it had 463,383 active loans and an outstanding portfolio of $59.3 million. NRSP also had over 1 million depositors (through deposit accounts with other banks). A key element of NRSP’s business model and mission is its rural focus with 83% loan portfolio in rural areas and 55% in the agriculture sector.
NRSP MFB has received a national level license for a microfinance bank under the Microfinance Ordinance of 2001. The Bank is expected to be setup with 52% ownership from NRSP, 19.9% from IFC and remaining 28.1% by other international investors. |
| Total project cost and amount and nature of IFC's investment |
| NRSP and strategic investors will establish the NRSP MFB with PKR1 billion ($12.5 million) paid up capital. NRSP will contribute 52% of the total equity through primarily cash and loan portfolio. IFC proposes to invest up to $2.5 million (19.9% of total capital). In addition, IFC also plans for a Partial Credit Guarantee to provide credit enhancement for NRSP MFB’s local debt financing for approximately $5 million equivalent local currency loan. |
| Location of project and description of site |
| NRSP currently operates in 50 districts in all 4 provinces of Pakistan. NRSP MFB is expected to be headquartered in Islamabad with branch offices in rural areas of South Punjab and Sindh and key large cities of the country. |
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| Anticipated development impact of the project |
Increased Access to Finance: Only 3.5% of the population has access to credit and the microfinance penetration is only 6.3%. This project will support NRSP MFB’s expansion to reach over 700,000 micro borrowers/depositors over 7 years of operation.
Transformation: The investment will enable the transformation of the largest MFI in the country and eventually help formalize one third of the microfinance sector.
Rural Focus and Agriculture Finance: NRSP MFB will focus on low-income rural farmers/entrepreneurs. The project will support micro-entrepreneurs in rural areas as well as agriculture business through further branch expansion and through the introduction of additional financial services |
| IFC's expected development contribution |
| IFC has a key role to play by providing scarce risk capital, in the current economic financial environment and through advisory services for a milestone transformation of the country’s largest microfinance player. The transformation will provide needed savings products and allow NRSP MFB to expand into new rural areas. No other IFI has IFC’s microfinance experience in MENA and Pakistan as well as its global experience in other microfinance transformations. IFC’s support is critical for NRSP MFB to be able to complete the needed transformation and begin operations as a microfinance bank. |
| Environmental and social issues - Category FI |
This project involves IFC support for the business of Microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Considering the nature of activities supported, the project will be required to:
Develop a procedure relevant to its business process, prior to disbursement or an agreed upon timeframe, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on Microfinance exclusion list
Identify qualified persons to manage and implement the procedure
Demonstrate commitment and resources to implementing the procedure
Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions
Submit a periodic report to IFC as per a format to be provided by IFC |
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| For inquiries about the project, contact: |
Dr. Rashid Bajwa
President & CEO
NRSP Microfinance Bank Ltd.
46, Aga Khan Road, F-6/4, Islamabad, Pakistan
Tel: +92512822324
Fax: 92512822779
Email: rbajwa@nrsp.org.pk |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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