IFC Client Launches First Micro Savings Products in Kyrgyz Republic
January 6, 2012 -- Bai-Tushum and Partners – the first microfinance institution in the Kyrgyz Republic to receive a deposit-taking license – launched its first savings products in September and has since opened more than 150 accounts for its customers. A leader in the country’s microfinance market, Bai-Tushum holds around 22 percent market share and has been an IFC client since 2005.
“Saving is one of the most important instruments to reduce poverty,” said Gulnara Shamshieva, General Manager, Bai-Tushum and Partners. “Most of our clients live in rural areas and have low incomes. By introducing savings products, we provide our clients with an opportunity to manage funds for their businesses and day-to-day needs, including children’s education, medical treatment, and housing expenses.”
IFC worked closely with the National Bank of the Kyrgyz Republic to improve legislation on the transformation of microfinance institutions into deposit-taking organizations and to create a simple application process. A study tour to Mongolia allowed regulators from Kyrgyz Republic and other countries to learn from counterparts in an advanced microfinance market. IFC advised the microfinance institution on transforming into a deposit-taking commercial institution through the IFC Azerbaijan and Central Asia Micro Finance Transformation Support Project.
“IFC’s workshop in Mongolia helped us implement changes in licensing policies and procedures,” said Samatbek Jumashev, Chief for Non-banking Organizations Control Division of the National Bank of the Kyrgyz Republic. “We initiated a dialogue with Bai-Tushum and Partners encouraging them to apply for a license. During the application period, we tested and streamlined deposit-taking procedures.”
Microfinance organizations in the Kyrgyz Republic have significant outreach to remote rural areas. They target low-income people and small businesses, mainly in agriculture and trading, which are traditionally risky sectors of the economy. In 2011 Bai-Tushum and Partners disbursed 46 percent of loans for trade, and 37 percent for agriculture and agriculture-related businesses. Introducing new products and services, such as savings, help the microfinance sector mitigate these sectors’ risks and diversify its activities.
Bai-Tushum became an IFC investment client upon signing a $1.2 million loan in 2005, and subsequently completed a $4 million deal in 2009 to finance micro and small entrepreneurs through individual and group lending products.