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Effectiveness of various microfinance initiatives in Pakistan, downsides to microfinance and effective alternatives to microfinance.
(Banking and finance)
S 148
Submitted by:
Muhammad Umar Niaz Mohsin Waheed Zuhaib Ijaz L1S09MBBF0015 L1S09MBBF0020 L1S09MBBF0025
Muhammad Kamran shafi L1S09MBBF2040
Faculty of Management Studies University of Central Punjab Lahore, Pakistan Spring 2011
Signed statement of originality: This project is submitted in partial fulfilment of the requirements for the degree of MBA Program we, the undersigned, declare that this project report is my own original work. Where I have taken ideas and or wording from another source, this is explicitly referenced in the text.
Signed................................................. (Name) M.Umar Niaz Signed................................................. (Name) Mohsin waheed Signed................................................. (Name) M.Kamran Shafi Signed................................................. (Name) Zuhaib Ijaz
[Note:
These statements must be signed and dated.]
Certificate of Approval (Effectiveness of various microfinance initiatives in Pakistan, downsides to

microfinance and effective alternatives to microfinance)
Spring 2011
It is certified that the work contained in this Project has been carried out by
Muhammad Umar Niaz L1S09MBBF0015 Mohsin whaeed Muhammad kamran shafi Zuhaib Ijaz L1S09MBBF0020 L1S09MBBF2040 L1S09MBBF0025
And is approved for submission as the partial fulfillment for the Degree of MBA Program.
_____________________________ Project Advisor [Name and Date]
ACKNOWLEDGEMENT
All and every praise be to Allah Almighty, Who guides us from darkness to light and help us in difficulty. We are greatly thankful to Allah Almighty and His last Prophet Hazrat Muhammad (SAW), whose blessings and grace enabled us to complete this study. It is a matter of great honor for us that Allah Almighty has given us a golden chance to carry out my Masters in Management Studies and research under learned, noble and kind person Prof. khalil Muhammad, Dean, Faculty of Management Studies, UCP, Lahore. We would like to say words of heartiest gratitude for the encouragement, guidance, and profound inspiration provided by my most competent and learned supervisor Prof. Salah-ud-din Ayubbi UCP, Lahore, whose indispensable guidance, deep consideration affection and thought provoking criticism enabled us to complete this work. We are also thankful to all the teachers and faculty members of FMS, UCP Lahore for their cooperation and guidance during our Masters in Management Studies. Words of thanks, surely insufficient and incomplete, without citation for all our worthy teachers by whom we got our spiritual values and basic of education throughout our study life. At the end, we are also thankful to all of those persons who helped us directly or indirectly in this research work.
Abstract
In this research microfinance basically is not a new development. Its roots started from 1976 when Muhammad Yunus the grameen Bank, as a pilot, in the suburbs Chittagong University campus, the village of jobra, Bangladesh. Microfinance institution provides financial services, the most poor and micro-enterprises. Microfinance have a optimistic impact on the life for the poor Positive impact does not only mean poverty alleviation (where the poor become less poor, where their poverty becomes less severe); it should also indicate poverty reduction the methodology followed was a mixed one on which riled on both personal interviews of MFIs bankers and questionnaires filled by the borrowers About 8 interviews and 100 questionnaire were conducted from bankers and borrower groups a small number of women were using loan themselves and in the house hold the loan was used by male themselves examining the effectiveness of microfinance 30% of the borrowers confirm the positive impacts of microfinance services. These services contain the provision of security free and interest-free loans for the poor, particularly in rural areas, at the full cost interest rates, repayable in regular installments. Borrowers are distributed into groups, in which the risk-reduction default. Microfinance is now regarded as one of the most significant tool and effective mechanism to alleviate poverty. These are effective mechanisms to disseminate valuable information on how to improve health, education, legal rights, health and other living standards, which is on the issues of the poor. The most important thing is that many microcredit programs directed at one is the most vulnerable groups of social - women, the family living, is little or no assets. Our study is on micro-finance and the impact of investigations of micro-credit to poor people of the society. The goal of the study is showing how microfinance projects work on poverty reduction, how it affects the standards of living (income, savings etc.) of the poor in Pakistan. From the study of data, we found that microfinance has a positive impact of the standards of living of the poor and on their living style. It not only helped the poor people to come over the poverty line, it also helps to improve their living standards and also helped them to empower themselves.
LIST OF ABBREVIATIONS
PMN MFBs MFIs NRSP SRSP PRSP PPAFP FMBL TML KBL KMB AKRSP PRSP IM ME SE SAARC
Pakistan Microfinance Network Micro finance Banks Micro finance Institutions National Rural Support Program Sarhad Rural Support Program Punjab Rural Support Program Pakistan Poverty Alleviation Fund Project First Microfinance Bank Ltd Tameer Bank Limited Khushali Bank Ltd Kasf Microfinance Bank Aga Khan Rural Support Program Poverty Reduction Strategy Papers Islamic Microfinance Micro-Entrepreneurship Social- Entrepreneurship South Asian Association for Regional Commission
TABLE OF CONTENTS
Serial
Description
Page No.
Certificate Acknowledgment Abstract Acronyms List Chapter No. 1 1.1 1.2 What is Microfinance 1. Microfinance Structure 2.1 1.2.2 Core values of Microfinance 1. Microfinance Products and Services 2.3 1.2 How Micro-Credit is Difference then Micro.4 Finance 1. Different Clients of Micro finance institutions 2.5 11 12 13 13 14 14 Introduction History of Microfinance 10 10
1.2.6
Benefits of Microfinance
14 15 16 16 17 18 19 19 19 20 21 20 20 21 21 22 22 23 23 24-30 31
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1.2.7 Microfinance challenges and programs alternatives. 1.3 Functions of Microfinance Bank 1.3.1 History of Microfinance Institutions 1.3.2 Basics of Microfinance 1.3.3 Distinctive features of Microfinance Banks 1.4 Microfinance Banks 1.4.1 Khushali bank 1.4.2 The First Microfinance Bank 1.4.3 Tameer Bank 1.4.4 Kashf Microfinance Bank 1.5 Different Programs of Microfinance 1.5.1 Pakistan Poverty Alleviation Fund Project (PPAFP) 1.5.2 Akhuwat 1.5.3 Kashf Foundation 1.5.4 National Rural Support Program (NRSP) 1.5.5 Sarhad Rural Support Program (SRSP) 1.5.6 Punjab Rural Support Program (PRSP) 1.6 Pakistan Microfinance Network (PMN) Chapter Literature Review No. 2 Chapter Research design
No. 3 3.1 What is microfinance 3.1.1 Micro Finance in Pakistan 3.1.2 Microfinance Institutions 3.1.3 Microfinance channels 3.1.4 Objectives of Research 3.1.5 Problem Statement 3.1.6 Hypothesis Development 3.1.7 Research Design 3.1.8 Data Sources 3.2 Theoretical framework 3.2.1 Development Tools of Microfinance 3.3 Microfinance Models 3.4 Microfinance-Interest free (Islamic Microfinance) 3.5 Micro-Entrepreneurship 3.6 Social Entrepreneurship Chapter Analysis of Questionnaire No. 4 Chapter Conclusion and Recommendation No.5 References 31 31 32 32 33 33 33 33 34 34 34 34 35 36 36 37-94 95-96 97-99
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CHAPTER ONE Introduction
1.1 History of Microfinance

Microcredit and micro-finance are comparatively latest term in the field of economic growth 1st coming to fame in the 1970s, according to Robinsons. Starting from the 1949s to the 1970s, the financial services are given to mostly in the subsidized rural credit programs. This mostly resulted in high loan frauds, high losses. Robenson state in the era of 1980s had shown a turning point in the record of microfinance in that MFIs such as Gramen Bank and Bank Raykat Indonesia has started to show that they can offer small loans and saving services profitability on a huge scale. There was a rapid increase in the number of microfinance institutions establishment in 1990s and there was an increase stress on reaching scale (Robinsons, 2001). Dichter (1999) suggest to the 1990s as the microfinance decade. According to Robinsons, 2001 microfinance became a growing industry. With the extended of microcredit institutions, small change in size and on the supply of credit and to the terms of other financial facilities such as saving and pensions (microfinance) and then it became obvious that the poor had a demand for these extra services. The importance of Microfinance in the era of expansion was unbreakable with the begin of the micro credit peak in 1997. This peak aim to reach 175 million of the worlds poorest families, particularly the women, with the loan to self-employed and other with the other facilities at the end of 2015 (Rajagoplan & Parikh, 2007)
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1.2 What is Microfinance?

Microfinance is the set of financial services like deposits, loans payment services, money transfers and insurance products to the poor and low income households, for the small business, which allow them to increase their income and also to increase their living standards Poor citizens have no access to commercial banks generally for lack of guarantees and security. But there are many other reason mixed, all commercial banks are reluctant to poor funding. These reasons are incorporated, and the poor have fewer educations, lack of proper know-how and training, high-cost on the transaction in small loans and lesser rate of profit. It is therefore limited choices to access to credit lead to more poor poverty. This lead to the idea of microcredit and microfinance. Microfinance, therefore, a financing, those who do not have security or any of the property protection. Microfinance is a way of financing to poor to its operations to alleviate their poverty, enhance their capacity to make collective benefit from the sustainable. Under (Agion and Morducch, 2003) that for the microfinance, there are much potential have appeared include expanding markets, sinking poverty and promote social change. But there is a broad puzzlement spread, microfinance is only for the poor loans, but we mention that microfinance is no longer is only a loan, wrapper the alleviation of poverty, the social impact of the poor and educate the poor for savings. Therefore, microfinance, today, not only nongovernmental organizations, but as a complete banking system. Under (ledgerwood, the 1999) "microfinance have transformed into an economic development loom planned to promote the low-income women and men. This means for Financial Services, low-income-clients, including self-employed, and the Asian Development Bank in the 2008 "microfinance is to provide a wide range of financial services, such as deposits, loans, payment services or transfer of funds, and insurance, and the poor and low-income families and micro-enterprises.
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1.2.1 Microfinance Structure

Economic activities are depending upon the sellers and buyer and their ability. Sellers, before going to market their product, look at nature of and ability of the buyers. On the additional side, banking activities are relying on both sellers and buyers. Financial institutions provide loan to both sellers and buyers for their business activities. The large projects are funded by Commercial Banks and they also invested in consumer finance. On the other side microfinance institutions didnt invest in consumer financing but microfinance provides loan only for micro enterprise. Microfinance appreciates the customers to improve their standards by doing business. Microfinance is committed only to poor and clearly for business programs. But with this view, there are some negative impacts of microfinance on the micro borrower which are alleviation of poverty, progress in healthcare, boost in literacy and other social impacts.
According (Ledgerwood, 1999), there are many programs and features are included in microfinance. Some are:
Small & medium term loans common security rather than financial security look for the real needy person who having demand for laon Due to expensive financial transactions and risk the interest rate higher Easy process, not too much paper work and small procedures Providing saving facilities to borrowers even for small amount Offering saving services to borrowers even for smallest amount Providing training facilities to borrower, and to development of their business
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1.2.2 Core values for Microfinance

The poor needs access to appropriate financial services. The poor has the capability to repay loans, pay the real cost of loans and generate savings. Microfinance is an effective tool for poverty alleviation Microfinance institutions must aim to provide financial services to an increasing number of disadvantaged people. Microfinance can and should be undertaken on a sustainable basis. Microfinance NGOs and programs must develop performance standards that will help define and govern the microfinance industry toward greater reach and sustainability.
1.2.3 Microfinance Products and Services

The following products and services are currently being offered by MFIs:
Micro loans:
The loan which carrying small value called micro loans this loan is less than US$100 in size. These types of loans are generally issued to small business entities.
Micro savings:
Micro saving accounts facilitates the customer to save small amount of money for future use.
Micro Insurance:
Micro insurance facilitates poor people in shape of pools risk and helps offer risk management. Micro insurance provides the customer of insurance policies that they have very small premiums and policy amounts.
1.2.4 How Micro-Credit is Difference than Micro-Finance

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Micro-finance related to the loans, savings and insurance, related to pool risk and risk management products for low-income customers. Micro-credit linked to small loans. Microcredit includes security free loans.
1.2.5 Different Clients of Micro finance institutions

The typical clients of microfinance are those people who do not have access to traditional banking system. In rural areas, they are usually
Farmers who are earning small income.
A. In city areas, microfinance activity is more different and include:
Shopkeeper, Provide services.
1.2.6 Benefits of Microfinance

2. Reduction in income poverty 3. Increase family income and quality of life 4. Increase in consumption in the same gap 5. Promotes saving habits among the poor
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1.2.7: Microfinance challenges and programs alternatives.

Microfinance institution faced the many significant challenges.
1
Non.approved institution desire not to be regulated

The advantages of regulating microfinance providers are not enough understanding by
non-licensed suppliers. The interests of the multilateral investment framework itself is, first to break the cycle donor funds. , secondly growths regulated microfinance potentials, and improve as a whole was more and more services. Many microfinance institutions held view, microfinance is only a charitable activities, and not in the financial services of the poor.
2
Microfinance institution management capacity is limited
The Working Committee and administrative structure of the micro-finance institutions lack of financial proficiency. Management staff often related from non-governmental organizations to focus on the social programs rather than financial sector
Consumer financial literacy and business expiries are limited
Customers are having little knowledge about the micro finance products thats why they didnt have grip over the financial services
Rural accesses to finance limited

Two third of the poor exist in the rural areas of Pakistan, only 1/3 branches of MFIs are
working in rural areas. Most of the microfinance does not have the infrastructure to expand in rural areas.
5
Demand for Islamic law complaint microfinance is unmet

Lot of clients are very conscious of conventional microfinance products that charge flat
interest rates, as these are contrary with Islamic law.

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Alternatives
The five programs alternatives includes
cleansing a variety of microfinance regulations Consumer financial and business literacy program Improve microfinance management
1.3 Functions of Microfinance Bank

Micro-finance institutions provide many of the functions of some of the poorest people of the world. MFIs providing small loan to the people, so that people have a chance to start a new business, growth of already exist business or buy of a product of volume, they can improve their profits and their lives.
1.3.1 History of Microfinance Institutions:The history of microfinance started from Bangladesh in 1976 when the professor Muhammad Yunus was giving a lecture on a research project in his local community. He was giving lecture to the poor of the rural areas of the surrounding university of Chittagong it was the college where he use to teach economic and they came to know that they are not lack of the skills of business but some home they are lack of the funds. During his speech he talk to one of the citizens he asked her how much you need for your business the answer was low than this expectation while he given her the required amount without collateral professor Younus made a verbal contract at that time the repayment tenure was of 52 weeks with the very low interest rate.
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1.3.2 Basics of Microfinance

The basic function of Microfinance institutions is to decrease poverty. This function usually done by the creating loans with relatively given low interest rate to people who cannot access the traditional form of financing.
1. Lending to Groups
The most common way in microfinance is Lending to groups. Microfinance institution confirm that the customer will pay back the loan in given time.. They need a person who is finding a loan with a number of other people are also seeking credit, so that each member of the group-guaranteed loans made to the other members.
2. Education
MFIs not only providing group lending, they are also providing education on how to run a business and how to manage the money
3. Emphasizing Women
MFIs giving stress on lending to women, one of the objectives of MFIs is empower the women. The study shows the profit which women earning were mostly spent to their families. Women are very keen about the education and better quality food for her children.
4. Not Just Credit

Microfinance institutions are not just credit provider, they also provide the new ideas of business, technology and new ventures for their customers.
1.3.3 Distinctive features of Microfinance Banks

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Lending Methodology A. Traditional Finance

1) Base on security 2) More paper work 3) Less labor concentrated
B. Microfinance
1) Not based on security 2) Less paper work 3) More labor concentrated
Loan Portfolio A. Traditional Finance

1) Smaller amount of loans 2) Loans bigger in size 3) Securitized 4) Long tenure
B. Microfinance
1) Additional loans 2) Loans are little in size 3) Collateralized free loan 4) Shorter tenure
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1.4Microfinance Banks
A micro finance bank is an institution that provides small loans to applicants who typically belong to poorest of society.
1.4.1 Khushhali Bank

In august 2000, khushali bank was established under the Governments Poverty Reduction Strategy and as a part of microfinance sector development program (MSDP). MSDP was developed with the help of Asian development bank. MSDP is of the purpose of to provide reasonable financial and common services to the poor. They also have significant impacts on poverty reduction through:

improved income level of poor households empower to women construct common capital decrease risks faced by the poor
The MSDP provides an incorporated bundle of strategies of reforms and way for institutional development and outreach development to facilitate growth of microfinance sector Khushhali Bank is the country's first major program to fulfill the need microfinance customers.
1.4.1 The First Microfinance Bank

The first microfinance Bank Limited began from aga Khan Rural Support Program (AKRSP) that had been a successful microfinance and included rural growth programs isolated. FMBL was a non-listed company under the terms of the Companies Ordinance 1984 in November 2001, the licensed as micro-financing agencies for their MFI 2001 Ordinance in January 2002.
1.4.2 Tameer Bank

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We provide low-income, self-employment and micro-entrepreneurs a series of financial product design, so that they can increase their operational and have a considerable economic doubled the local economy, and we also offer home perfection products and term deposits. Tameer is a MFI establish by a group of extremely qualified bankers
1.4.3 Kashf Microfinance Bank

Kashf microfinance Bank Limited (KMBL) was started its setup in June 2008 a vision of as Pakistan's leading MFI services have become a prosperity, equality and poverty free Pakistan. kmbl will provide a diversified financial products and services, low-income earners and selfemployed persons of Pakistan. It will use and building on its the company's outreach and familiarity, and in the agreement New Road is a norms, the deposit entities, maintaining the group committed to financial services. KMBL has begun its lending process 1 November from 2008; now face the operational responsibility and 18 branches. Primarily, the existence of 13 cities in the Pakistan and another 14 branches will be opened this year in a network of 32 branches, of this year. In five years, we plan to open 100 branch of contacts 31 cities over 1 million customers.
1.5 Different Programs of Microfinance 1.5.1 Pakistan Poverty Alleviation Fund Project (PPAFP)
The PPAF helps the poor and provide them recourse to earn income and construct the projects aiming to improve their living standards. PPAf program was supported by Government of Pakistan and its was funded by the World Bank. World bank has funded 90$ million for this program and Government of Pakistan made a donation of 10$ million. The project is for the poor, rural areas and for urban communities particularly the project is targeting to empower the women by providing them sustainable resources to generate their income and to improve their living standards.
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1.5.2 Akhuwat
Akhuwat started it business in 2001, its purpose is to provide interest-free micro credit to the poor, in order to improve their living standards. Akhuwat is committed to improving life of the poor; those in financial abuse neglect and ignore by the society. As a registered nongovernmental organization, Akhuwat provided to the poor-free loans, so they can get a life and skills and support they need to reach its full possible. To that end, Akhuwat come to their funds from civil society. It does not depend on the intercontinental funding; on the contrary, it has used volunteerism and tradition, fundamental principles is all religions. The total payments Akhuwat has now been increased to Rs. 547 dollars, in just eight years. The Akhuwat most successful, it has been involved in helping more than 49, 500 families from dependence of self-support.
1.5.3 Kashf Foundation

Kashf Foundation began its way towards effective microfinance in 1996. Kashf foundation is basically the outcome of the research study which was showing the impact of microfinance programs for women to low income communities. Fundamental challenges, such as construct confidence in the community, satisfying the client, to start saving with Kashf, gathering the women in groups and help them to identify the rules and regulations, to come to the right program design and an effective means of implementation. The growth phase (1999-2001) focused on the effective and dependable branch management system. Ensuring customer satisfaction was given the top priority, in order to avoid attrition; research was conducted to understand our customer needs and requirements. kashf is the first MFIs in Pakistan who set up a micro-insurance products. The outcome of the hard work and devotion by kashf, s staff as particularly productive; in a period of three years number of branches has trebled. The current kashf of 35 branches, total 2, 877 Center, takes care of 71, 000 customer from cities, semi-urban and rural areas of Punjab province.
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1.5.4 National Rural Support Program (NRSP)

National rural support program was launched in 1991. It was the largest rural program in the country in promoting, staff and growth activities. It is a non-profit organizations registered according to article 42, the Company Ordinance 1984. NRSP s mission is to alleviate poverty from exploiting the potential and growth activities in Pakistan. Its presence in 46 districts of all the four provinces including Azad Jammu and Kashmir through regional offices and field offices. nrsp is currently working with more than 500,000 poor families organized into a network, over 57, 179 social organizations. With sustainable growth, it is Pakistan's major power for poverty reduction and rural growth. The main purpose of NRSP is to establish a national network of proletariat organizations to enable the rural community planning, implementation and management of development activities and programs to ensure productive employment, alleviating poverty and improve quality of life.
1.5.5 Sarhad Rural Support Program (SRSP)

Sarhad Rural Support Program (SRSP) approved under article 42, the Company Ordinance in 1984 as recognized in November 1989, aimed at reducing poverty in rural areas of the north western through participatory methods of social mobilization. srsp is currently working in the 10 district north-west charsadda, karak, Kohat, Hangu, Peshawar, nowshera, Mansehra, , haripur. It use an approach where actions targeting the identified needs of the community are undertaken within the different Program components, which include a) Social Mobilization (b) Productive Investments (c) Natural Resource Management (d) Social Sectors & Gender Issues (e) Human Resource Development and (f) Credit & Enterprise Development Programs
1.5.6 Punjab Rural Support Program (PRSP)

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The Punjab Rural Support Program (PRSP) was registered as a company limited by guarantee under Section 42 of the Companies Ordinance 1984, PRSP is a non-profit & non-government organization. PRSP started its operation in June 1998. PRSP purpose is to reduce poverty, social &economic empowerment in the rural areas of Punjab Province with the help and contribution of AKRSP, NRSP and SRSP which are running successful.
1.6 Pakistan Microfinance Network (PMN)

The PMN starts its business in 1995 as an informal union relies upon the mixture of feelings and knowledge between microfinance providers working in Pakistan. In 1999 this group effort, the Microfinance Group Pakistan, received financial support from the Aga Khan Foundation and the Asia Foundation. As the PMN starting to expand its business gradually it starting to gain confidence and trust among donors. In the era of 2001 PMN become a separate legal entity.
CHAPTER TWO Literature review

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Following is the literature review related to our research, some articles written by Pakistani authors and rest are written by foreign authors. Rauf and Mahmood( 2009) analyzed that Micro finance sector is adopted an extensive growth strategy and made some progress in various indicators of outreach and performance, yet the challenge of increasing the breadth, depth and scope of outreach at lower cost remains high. The operational and financial sustainability of the sector is weak. The overall cost per borrower is increasing and the productivity ratios are also low. The most important reason for weak financial position of the MF sector is the inappropriate and costly growth strategy of over expansion which adversely affected the cost and productivity of the Microfinance sector. Group wise analysis suggests that Microfinance banks are not performed very well among the three groups and Microfinance institution have so far performed the best. Within the three groups variations (MFIs, MFBs, and RSPs) in performance are observed, indicating that the overall performance of the group is weakened by the performance of any one of the large institutions within the group. In order to minimize the trade-off between the social and commercial objective of microfinance, the Microfinance sector needs to concentrate less on extensive expansion and should focus more on utilizing the existing human resource and financial resources intensively. The main targets set by the Microfinance sector may be more simply achieved by adopting an intensive growth strategy (Rauf and Mahmood, 2009). Setboonsarng and Parpiev (2008) analyzed that The member states of the United Nations are true to achieving the Millennium Development Goals (MDGs), including the goal of bisecting extreme poverty by 2015.Microfinance is recognized as an effective development interference for poverty reduction. The purpose of this study is to evaluate the impact of Khushhali Bank (KB), the leading microfinance bank in Pakistan, on specific targets regular with MDGs. The contributions microfinance to the MDGs concludes that microfinance institutions play vital role in contributing, directly and indirectly, to all the eight MDGs. Microfinance helps to improving income and reducing poverty (MDG 1), providing school education and training to children (MDG 2), and paying for health services (MDG 4 6women are the main beneficiaries of microfinance, so MFIs helps to women's empowerment and gender equality (MDG 3). As for the environment (MDG 7) with their financial services MFIs are increasingly combining
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environmental programs. Although the contribution may be indirect. For MDG 8, since Target 12 calls for the development of open, rule-based, equal financial systems, the expansion of microfinance programs themselves is the achievement of MDG 8. The research proves that KB has been effective, overall in reaching out to the poor and has rapidly expanded its outreach to remote rural areas of Pakistan, regular with the governments poverty alleviation program. Highly important is the borrowing households increased use of pesticides. While pesticides escort to improved productivity and income, if it is not properly used then it may lead to negative outcomes on health and the environment (Setboonsarng and Parpiev, 2008). Sapkot (2008) described that A major part of the world's population still exist in in rural segregation faced by problems such as poverty, disease, illiteracy, inadequate resources and such others. rate of poverty is higher in rural area as compared to the urban and semi-urban area. Therefore, the main challenge for the development is reduction of poverty and hence poverty reduction has been the main focused program in the past as well as present national development plan of the government. Mostly farmers suffers the problem of lack of agricultural inputs. There is less savings and less agricultural capital. Due to less savings and agricultural capital the rise of rural agricultural sector through rural credit is one of the great steps towards the developmental activities. The Small Farmers cooperative Limited (SFCL) is one of most important sectors to finance in rural agricultural sector. The SFCL is being popular among the rural farmers. It provides financial credit and other social services. Feeling of ownership is one of the main reason due to which they are utilizing it for their own benefit. It is providing different social services and financial credit . It is one of the great contributions of the SFCL to expand the group saving. It is a great beginning to assemble the small saving in rural area. Despite widespread rural poverty, the rural poor are able to make their own savings. A multidisciplinary approach to study the problems of the small farmers is needed to understand the complex socio-economic system of the small farmers and device the means of helping them. There is a need to create awareness all over the country to the ability and potentiality of small farmers and also to encourage them to come forward. All development programs should be made balance from a gender viewpoint. Many programs of government benefit men more than women; therefore women stay poorest of the poor. The real development is only possible when we can equate our thinking and action with
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that of small farmers. As well as credit farmers also need other inputs like business and technical training, establishing of market linkages for inputs and outputs and some infrastructure (Sapkot , 2008) Mcguire and D. Conroy (2008) described that Since mid 1997, in East Asia a number of countries have been hit by a severe economic and financial crisis. This has a number of potential allegations for microfinance. Economic recession has reduced the opportunities for employment in the formal sector of the economy, results in forcing more and more people into the informal sector. High rate of poverty , this has increased the number of microfinance borrowers. To get a better understanding of these and other issues, the Banking with the Poor (BWTP) Network conducted a survey of the impact of the crisis on microfinance in April 1998. It is too early to estimate the full effects of the current financial crisis in East Asia on microfinance. The crisis itself is still recounting. GDP is projected to contract sharply in a number of countries in 1998, with further falls expected in 1999. One important factor is that the countries in Asia with the greatest awareness of poverty have so far been little affected by the crisis. While the nine countries included in the research had an projected 495 million people living in absolute poverty in 1995, some 440 million of these were in South Asia, which has been relatively untouched by the crisis. The study proves that the crisis effects the institutions more that are serving small business clients than on specialist MFIs serving the poor. In the Philippines this seems to be a healthy conclusion. Microfinance appears to have suffered most where it is linked into the formal financial system. This is not surprising as the crisis has been first and foremost a financial one. Rural banks in Indonesia, which are a major supplier of micro financial services, are facing a very difficult situation. In the Philippines, it appears that thrift banks and possibly rural banks have suffered more than specialist MFIs, with cheap deposits forcing the thrift banks to reduce their loan portfolios. And MFIs in the Philippines and Malaysia have found it very difficult to maintain connection with commercial banks, because of increased interest rates and more cautious lending policies (B. Mcguire and D. Conroy, 2008) Kabeer (2008) describe that The microfinance industry have a extend in its efforts to build up an organization to set and encourage values for financial exposure. As this segment attracts profitable resources and state bank regulations, financial treatment standards to encourage
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reliability, clearness. Microfinance has a great deal to find out from other principles bodies, mainly concerning structure, linked association and revenue making. Stakeholder commitment is vital for the treatment of Standards project. To achieve common goals collective efforts of individuals and organization is very important. Microfinance growth internationally; emergent usually agreed-upon exposure standards is becoming very important to the reliability, consistency, and long-term benefit for the whole industry (Kabeer, 2008). M. Datar and J. Epstein (2008) The contest over whether microfinance works, few MFIs eloquent what, exactly, their eventual goals are and they will accomplish them. The authors try to reduce the confusion about theory of MFI. The goal of microfinance is not only eradicate poverty but also MFI spotlight to help their customers a flourishing enterprise and the goal of MFI is not provide a bigger loan. The poor customer who have not able to provide significant collateral and have not a good credit history MFI provide services just like loans, deposits, etc to such customers. The primary role of MFI is to provide loans to its poor customers. In the view of client after providing loan the institution only provide services. (M. Datar and J. Epstein, 2008). Khan & Rahaman (2007) analyzed that Microfinance is not a new expansion. MFI have a long histry in Asian developed and developing countries. Microfinance is a credit line, which utilize efficient security alternate for short-term loans. Microfinance improved poverty alleviation in Bangladesh. Microfinance has mainly impact on the living standard of women. Many scholars and NGOs have been working for the people who are not able to get any benefit from conventional bank.. It was supposed that microfinance is not significant for all people but most people can advantage from this plan. According to this theory the process of taking loans from MFIs is simple than conventional banking. The study also established the idea about positive effect to run their business effectively. This is also one of the main cause of micro finance scheme.. many lender and borrow are assisted under this machanisim. The borrowers search out the strategy from the MFIs workers to expand or to run the small business, which can only just be estimated from conventional banks. Another crash of MFIs that was establish to be important is the formation of employment chance. Microfinance actions are progress of the living standard of but also in common expression.. (Khan & Rahaman ,2007)
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Muhammad and chang (2007) described that Poverty means incapability to get a standard of living. Poverty is a condition in which person or households lack the possessions essential to be able to use a certain goods. Poverty is a difficult fact, which goes away from the notice of income. In Pakistan poverty is a major economic matter. A more recent analysis of poverty indicates that the frequency of poverty in the country is considerably clear. In the social sector slow economic growth are reflected in Pakistan. Through human development a weakened social programmed is determined. Pakistan is facing more microeconomic waning the economic development increase poverty. The agriculture segment has grown at a rate of 1.8 % over the last three years. Without the transparency and good governess socio economic development can not be achieved in a country. To eradicate poverty microfinance scheme is very successful in all over the world. Though, this plan have not been easily available for the common access to general public. (Muhammad and chang ,2007) Banuri (2006) By providing small loan through microfinance to poor people for their bussiness poverty can be eridicate poverty. This fastidious kind of lending have existed quite some time ago in the world.in 1970s Muhammad Youns formulate this scheme in Bangaladesh and he have won noble prize in peace in 2006 for his pains in reducing poverty and provide valuable resources to the poor people via the Grameen Bank and model of microfinance. Now a day MFIs allows pooled savings and small landings with favorable terms. For a small period of time only 10 USD give loan to poor people and after repayment of this amount the individual is able to access further loan. Microfinance would empover the poor people to start their earning and also stable their incomes and women are special for this type of loaning. Though, this research scheme attempts to simplify the decision to contain the poor overall, and attempt to make no difference in the demographics of the microcredit recipient. (Banuri 2006) Hulme and Moore (2006) described that MFI insist that all their members were poor, that all loans were a triumph for the borrowers, and that the femininity and group empowerment being generated was swiftly producing a unrestricted humanity. It started as a project by Professor Yunus and his social group were members of a social society. They were financed by public and NGOs. The Grameen Bank became a legal body. We can tag this as networks, or whatsoever but two effects are to be noted .First, the main players are govt. and common society.
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This is public act. Secondly the private sector had played only a slight role in this success. The case Hulme and Mosley (1996) made 10 years ago. That profitable business does not endow in creating pro-poor innovations, that to provide services to poor they are not pioneers but they are followers. We would also add that the futurist management wants not only to be-technically able but the requirement is to have the skills to handle the domestic and worldwide supporting economy, and that the institutional process had to allow educating and permitting efficient execution systems to operate. It also be note that thousands and millions of small women have ended microfinance a success (Hulme and Moore, 2006). Swope (2004) that Microfinance is an more efficient method of reduction poverty. MFIs have developed many inventive practices to account for the difficulties of providing credit to the poor. The village microfinance banks has enabled to reach areas the microfinance programs with restricted mobility and lack of infrastructure. Group lending encourage the poor to collaborate in friendship and to offer support for loans and small businesses. The microfinance banks focus on female entrepreneurs allows women to access the economic opportunities that they need to empower themselves. This Research has shown that MFIs can reach the poorest implementing integrated programs that address the needs of destitute families. The increasing numbers of microfinance institutions are gain financial sustainability and their outreach while focusing on the neediest people in society. Microfinance bank allows women to control over their liviving slandered and to improve the skill and confidence. These benefits are increase in household income, consumption, gains over time, better nutrition and health, higher education and school attendance and female empowerment. A real poverty alleviation program fights poverty by social, political, and economic programs .Poverty strategy that aims for poor people how marked reform needs to recognize that how to help themselves far better than aid agencies and social organizations. Microfinance gives the power to the people how to fight the problems. (Swope, 2004) Ahmad and Gafoor (2003) described that Khushhali Bank Rahim Yar Khan is help the poor people to reduce the poverty and improve the living standard of poor people. Loan size should be enough to cover the requirements of borrowers. The president of Khushhali bank should be given financial incentive. The bank manage for saving collection rather than involving commercial banks. The bank must manage profit on accumulated savings of borrowers. The
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bank especially disbursement of credit for farmers .According to ordinance the objective of the bank is to mobilize funds and provide sustainable micro finance services to poor persons, particularly women, in order to mitigate poverty and promote social welfare and economic justice through community building and social mobilization. Technical training must be providing to all borrowers. Interest rate should be lowered then 20%. (Ahmad and Gafoor ,2003). Weiss and Montgomery (2003) described that The microfinance revolt changed her rules through helping the poor people in many countries and provide the flows of credit to very lowincome groups. This research studies on the impact of MFIs are often more certain about its impact than is the aid community. The methodological problems of establishing suitable statistical controls and without a doubt the range of difference found in practice in the way of microfinance operation. The more good poverty impact studies are important to grind understanding of its role to judge its impact in different environments and to shape the dispute on ways forward for MFIs. This is a very powerful statement of doubt and reflects a lack of correct data, but in part of methodological difficulties linked with assess exactly what proportion of income and effects on the beneficiary of micro credit can exactly be accredited to the programs themselves. In this paper aims to bring together some of the recent proof that has been accumulating on the impact of microfinance activities on poverty reduction (Weiss and Montgomery, 2003)
CHAPTER THREE 3. RESEARCH DESIGN 3.1 What is microfinance?

Microfinance is the set of financial services like deposits, loans payment services, money transfers and insurance products to the poor and low income households, for the small business, which allow them to increase their income and also to increase their living standards
3.1.1 Micro Finance in Pakistan

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The history of Microfinance started in Pakistan in the early 1980s when the Aga Khan Rural Support Programmed (AKRSP) started its credit network in the North areas of Pakistan in 1982 and in the same year with the establishment of the Orangi Pilot Project (OPP). The AKRSP was executed in the entire country in 1990s by the existance of National Rural Support Programme (NRSP) and the Sarhad Rural Support Programme (SRSP). These foundations were common support foundations that provided a ample collection of social services, together with financial services. The Financial services which were provided to the poor were highly sponsored and small works were made to recover bad loans. To solve these deficiencies in 1996 the RSPs established specific microfinance NGO called as Kashf Foundation. Pakistan Microfinance Network (PMN) began to play a vital role in rising Micro Finance Providers (MFPs). Additional growth chase in 2000, when the Pakistan Poverty Alleviation Fund (PPAF) complete its first loan.
3.1.2 Microfinance Institutions

The MFIs are financial institutions that offer financial services to the poor. These institutions are under the legal structure and their mission methodology provide wide range of services still, all share the common feature of providing financial services to a customers poorer and more susceptible than traditional bank customers. In simple words, MFIs is a group that offers financial services to the poor. The low income population was assisted by MFIs most of them are NGOs
3.1.3 Microfinance channels

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First Microfinance bank Ltd Development Action for Mobilization and Emancipation Kashf Foundation National Rural Support Programme (NRSP) Orangi Pilot Project (OPP) Punjab Rural Support Programme (PRSP) Sarhad Rural Support Programme (SRSP) Sindh Agricultural & Forestry Workers Cooperative Organization (SAFWCO) Sungi Development Foundation Taraqee Foundation (TF) The Bank of Khyber (BOK) Orix Leasing Pakistan Ltd. Rozgar MicroFinance Bank Community Support Concer Asasah Akhuwat Khushhali Bank Tameer Microfinance Bank
3.1.4 Objectives of Research

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To evaluate the role of microfinance institutions for poverty alleviation in Pakistan. To trace the evolution of Microfinance in Pakistan. To identify the problems faced by the customer of microfinance in Pakistan.
3.1.5 Problem Statement

In the last decade or so micro finance sector in Pakistan has gained considerable importance in solving social problems and poverty alleviation. At present a variety of institutions such as ranging from banks such as Khushalli bank to government support programs are giving micro finance services to the poor. As compared to the huge potential the sector has in Pakistan it still remains underdeveloped. Even after spending huge amounts in poverty reduction the results attained are still unsatisfactory and the poverty percentage is standing quite high. Thus the problem in which the present research will concentrate focuses on developing better understanding of the role micro financing is playing in removal of poverty and how much successful the institutes are in their role while offering the services regarding line of credit to the poor. Following is the problem statement, which will guide us in our research work.
3.1.6 Hypothesis Development

Ho: Microfinance is not playing its role in poverty alleviation. H1: Microfinance is playing its role in poverty alleviation.
3.1.7 Research Design

Research methodology includes collection and analysis of data. The data has been collected from secondary sources & primary sources. In primary sources we prepare a questionnaire about poverty & problems of microfinance. Secondary data provides a starting point and offer advantage of low cost.
3.1.8 Data Sources

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Books Articles Reports Newspaper
3.2 Theoretical framework 3.2. Development Tools of Microfinance

In the under developing countries, groups from low households having innovative ideas for their business, even as house hold or shop keeper products manufacturer, but they did not have financial funds to apply their ideas. These poor economic actions in low income societies due to short of financial resources direct them to poor life standards and more poverty. There is same concept about MFIs that they provide financial facilities like credit programs and saving. Microfinance also provides payments services and insurance facilities to their customers. But the main feature of microfinance is not only financial intermediation but also offering social intermediation and social services to their customers. Trainings, management development, and financial literacy activities are included in the social intermediation and social services.
3.3 Microfinance Models

Whole scenario is changed with the help of Microfinance and approach to poor to turn up their ideas and obtain financial benefits. With the help of microfinance around 70 million poor people are getting benefits from 2500 MFIs in more than 100 countries. Circumstances of poor vary from country to country in the whole world. These circumstances are linked to social, ideological and political concern. Thats why microfinance is having some typical differences between purpose and approach. Following are the main two approaches of microfinance Grameen Model Progressive lending-Banco Sol Model
3.4 Microfinance-Interest free (Islamic Microfinance)

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Most of microfinance institutions are charging micro 20% to 30% percent which is higher than the traditional banking system. MFIs are charging too much because they are providing loan to the door step, small loan amount and risk elements. This high interest rate can affect the overall success of business and put borrower into a panic conditions. Introducing interest free approach in microfinance which is Islamic microfinance. Interest (Riba) in Islamic laws banned because by Islamic rules and regulations, money is not a thing which can be used as an asset. Islam, encourage profit rather than interest because making income or profit involve productive activity and engage in profit and risk sharing between borrower and lender . Microfinance interests can be deal with freedom in many ways, but we will be discussed three well-known by style, musharaka and murabahah). (Hassan & K.lewis, 2007)
1. Mudaraba (Participation financing):

Mudaraba means that contact of financial institutions and borrowers, for this option, capital providers and entrepreneurs have no pre-determined amount of interest, but will work based profit-sharing Moradabad is a trust based financing agreement whereby an investor (Islamic bank) entrusts capital to an agent (Mudarib) for a project. Profits are based on a pre-arranged and agreed on a ratio. This agreement is akin to the Western style limited partnership, with one party contributing capital while the other runs the business and profit is distributed based on a negotiated percentage of ownership. In case of a loss, the bank earns no return or negative return on its investment and the agent receives no compensation for his (her) effort.
2. Musharaka:
Musharaka is just like a joint business between two or more person or between two or more organization. Two parties provide capital for a project which both may manage. Profits are shared in pre-agreed ratios but losses are borne in proportion to equity participation.
3. Murabahah:
In murabahah, financial institution 1st buys things and then resells it to borrowers with addition of some affordable profit. After 3.5 Micro-Entrepreneurship
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Microfinance is playing a vital role in micro-entrepreneurship. It is a promising instrument for the development of economy, poverty alleviation, empowering the communities of low income. It has achieved a important role in developed and also developing countries. Most of the studies on micro financing are a tool for poverty reduction and empowering of poor but there is less studies on Micro enterprise and Micro-entrepreneurship. There are two types of microfinance borrowers according to (Mondal) one is Micro borrower and other Micro entrepreneur. Micro borrower having view of to earn profit by doing business. So micro borrower get funds from Micro Finance Institutions, after paying it back, they will get funds again but only to generate profit but not any capitalist attainment. On the other side, micro entrepreneur funding their business and brings creativity, and modernization doing.
3.6 Social Entrepreneurship

Social entrepreneurship thought is known practices, including a broad range of actions such as personal in the enterprise committed to making a difference; social purpose efforts to join enterprises profit motive of non-profit sectors; and non-profit organizations, is re-create and innovation as a change in policy-makers draw lessons from the business world
CHAPTER: 4
Analysis of demographic variable 37
Following is the analysis of few of the demographic variables used in our questionnaire.
Table 4.1 percentage of respondent with respect to age Frequency Valid 18-25 25-35 35-45 45 to above Total 21 29 26 24 100 Percent 21.0 29.0 26.0 24.0 100.0 Valid Percent 21.0 29.0 26.0 24.0 100.0 Cumulative Percent 21.0 50.0 76.0 100.0
During the process of data gathering, the researchers visited different parts of the city to get the questionnaire filled. After the data analysis the researchers learned that the individuals in the age limit of 25-35 years were the ones more interested in getting a micro credit or were in the middle of paying back the credit.
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Table 4.1.1 percentage of respondent with respect to gender
Frequency Valid Male Female Total 75 25 100
Percent 75.0 25.0 100.0
Valid Percent 75.0 25.0 100.0
Cumulative Percent 75.0 100.0
From date gathering researchers came to know that 75% of male are interested to take loan from MFIs and rest of the 25% are belong to female who are willing to obtain loan from MFIs.
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Table 4.1.2 Number to respondent with the respect to Occupation. Cumulative Frequency Valid Hair Saloon Tailor Manufacturer Retailer Others Total 32 41 21 5 1 100 Percent 32.0 41.0 21.0 5.0 1.0 100.0 Valid Percent 32.0 41.0 21.0 5.0 1.0 100.0 Percent 32.0 73.0 94.0 99.0 100.0
Table 4.1.2 gives the number of respondent involved in different occupation. Thos who were contracts workers were involved in doing different chores on daily wages basis. While the category includes occupation such as tailor is the most of the respondent s part of this category were those belonging to more developed part of the city as compared to other Analysis of questionnaire:
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Following is the analysis of questions used in the research questionnaire along with the pie chart illustration of each.
Table 4.2 customer having knowledge about MFIs
Frequency Valid Yes No Not Really Total 11 39 50 100
Percent 11.0 39.0 50.0 100.0
Valid Percent 11.0 39.0 50.0 100.0
Cumulative Percent 11.0 50.0 100.0
Table 4.2 shows that the majority of the population not really having knowledge about micro finance and its terms and condition. People are having little knowledge about the micro finance
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Table 4.2.1 where respondent go in the situation of financial crises Cumulative Frequency Valid Relatives Friends Landlords Micro Finance Institutions/Banks Total 100 97.1 100.0 20 10 9 61 Percent 19.4 9.7 8.7 59.2 Valid Percent 20.0 10.0 9.0 61.0 Percent 20.0 30.0 39.0 100.0
Total
103
100.0
Table 4.2.1 shows that in case of financial crises most of the respondents were in favor of getting help from financial banks. The researchers believed the most probable answer to this question would be from a friend or a relative. When respondent were asked regarding this they all gave the same opinion that nowadays not enough trust is left among the relatives to borrow money
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from each other also they dont have any finances saved either. Therefore they are left with no other option but to get a loan.
Table 4.2.2 financial institution whom respondent know Cumulative Frequency Valid MFIs NGO Banks Non banking financial institutions Total 100 100.0 100.0 53 19 13 15 Percent 53.0 19.0 13.0 15.0 Valid Percent 53.0 19.0 13.0 15.0 Percent 53.0 72.0 85.0 100.0
Table 4.2.2 shows that the most of the respondent are having knowledge about all the financial institution. The most known organization is MFIs. The research shows that people are getting information about MFIs. The responses from this question clearly indentify the ever spreading network of microfinance giving institutions that even those who were completely illiterate had information regarding the bodies and basic knowledge of how they work.
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Table 4.2.3 Purpose of borrowing Cumulative Frequency Valid Starting a New Business Stability of existing Business Expansion of existing business Other Total 2 100 2.0 100.0 2.0 100.0 100.0 9 42 47 Percent 9.0 42.0 47.0 Valid Percent 9.0 42.0 47.0 Percent 9.0 51.0 98.0
Table 4.2.3 shows that the purpose behind getting microfinance loan by the population was expansion of basic needs. This shows that the microfinance loan which is mostly given to respondent to expand their existing business and also given to stability of existing business.
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Table 4.2.4 earnings before Borrowing
Frequency Valid 5000 or less 6000 to 10000 11000 to 15000 Total 15 47 38 100
Percent 15.0 47.0 38.0 100.0
Valid Percent 15.0 47.0 38.0 100.0
Table 4.2.4 shows that the majority of the respondent income lies between 6000-10.000. from this study the researcher came to know there are women who either used to earn themselves only, or their husband also used to support them or they had their children both sons and daughters earning as well
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Table 4.2.5respondent earning after Borrowing
Frequency Valid No change Worst change Better Change Total 13 42 45 100
Percent 13.0 42.0 45.0 100.0
Valid Percent 13.0 42.0 45.0 100.0
Table 4.2.5 shows the change in earning per month after obtaining the loan. Most of the population categorized better change in their income, followed by the worst change in the income of the respondent
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Table 4.2.6 Amount of borrowing by respondent
Frequency Valid Less than 20000 20000 to 50000 50000 to 100000 100000 to 150000 Total 20 21 37 22 100
Percent 20.0 21.0 37.0 22.0 100.0
Valid Percent 20.0 21.0 37.0 22.0 100.0
Cumulative Percent 20.0 41.0 78.0 100.0
Table 4.2.6 shows that majority of the population has taken loan of amount ranging from rupees 50,000- 100,000. During date gathering researcher came to know that most of people are having more than 1 loan from different institution. Respondent pay back its 1st loan by the 2nd loan and gain trust of the institution to obtain more loan from the institution.
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Table 4.2.7 interest rate paid by respondent
Frequency Valid 20%-25% 25%-30% 30%-35% Total 21 59 20 100
Percent 21.0 59.0 20.0 100.0
Valid Percent 21.0 59.0 20.0 100.0
Table 4.2.7 shows that the majority of the people are paying 25%-30% interest rate on their loans. But the majority of the respondent knew the exact amount in rupees they were asked to pay extra in the form of interest after the payback of the principle amount of their microfinance loans.
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Table 4.2.8 Repayment Cycle
Frequency Valid Monthly Quaterly Total 95 5 100
Percent 95.0 5.0 100.0
Table 4.2.8 shows that 95% of the population being studied who had taken microfinance loan were followed the payback schedule of monthly payments. Researcher came to know from the study that it is convenient for the respondent to payback the installment in monthly terms
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Table 4.2.9 Repayment period of the respondent
Frequency Valid 0 to 6 month 6 to 12 month 12 month or above Total 3 91 6 100
Percent 3.0 91.0 6.0 100.0
Valid Percent 3.0 91.0 6.0 100.0
From the table 4.2.9researchers came to know that the majority of the respondent takes the loan from 6-12 months.
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Table 4.2.10 Interest Burden
Frequency Valid Not satisfactory Somewhat Satisfactory Satisfactory Very Satisfactory Total 86 11 2 1 100
Percent 86.0 11.0 2.0 1.0 100.0
Valid Percent 86.0 11.0 2.0 1.0 100.0
Table 4.2.10 shows how the respondent looks at the interest burden? The majority of them find it really a hard thing to do. Most of the respondent fined it somewhat satisfactory. In respondent view it is not easy to pay such a huge interest rate.
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Table 4.2.11 Repayment (Principal + Interest)
Frequency Valid Yes No Not really Not at all Total 1 69 2 28 100
Percent 1.0 69.0 2.0 28.0 100.0
Valid Percent 1.0 69.0 2.0 28.0 100.0
Table 4.2.11 shows that whether the respondent find it easier to pay the principal amount plus interest. The majority of the respondent find it hard to pay the principle amount plus interest. Researcher find that it is painful for respondent while paying the principle plus interest
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Table 4.2.12 Re borrow after repaying the first loan
Frequency Valid Yes No Not really Not at all Total 44 53 1 2 100
Percent 44.0 53.0 1.0 2.0 100.0
Valid Percent 44.0 53.0 1.0 2.0 100.0
Table 4.2.12 tells about the respondent reply after paying back the loan whether the respondent is willing to re borrow it or not? While gathering the date researcher came to know that no one likes to borrow money but due to financial crises respondent intend to borrow money.
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Table 2.2.13 Recommended to Others
Frequency Valid Yes No Total 24 76 100
Percent 24.0 76.0 100.0
Table 4.2.13 shows the negatively reaction of the respondent while asking them that they recommended their bank to any of their friend or relatives and the majority to the population respond to no. This show how much people this like to borrow or they are not satisfied by their bank.
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Table 4.2.14 MFI provide consumption/Emergency loan
Percent 10.0 90.0 100.0
Table 4.2.14 shows that according to the population MFIs did not provide emergency loans to their customers. While gathering data researcher came to know that some time respondent is in need of the emergency loan so there must be facility like emergency loan.
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Table 4.2.15 Penalty of Late Payment
Frequency Valid No Yes Litlle Yes large Total 2 73 25 100
Percent 2.0 73.0 25.0 100.0
Valid Percent 2.0 73.0 25.0 100.0
Table 4.2.15 shows that the respondent dont like to pay extra charges on late payment of installment most the respondent find it yes little large the penalty but no one likes to pay late penalty.
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Table 4.2.16 Access the repayment facility Cumulative Frequency Valid Convenient Not so conveient Inconvenient Total 21 62 17 100 Percent 21.0 62.0 17.0 100.0 Valid Percent 21.0 62.0 17.0 100.0 Percent 21.0 83.0 100.0
Table 4.2.16 shows how the respondent access the repayment facility it is Convenient or inconvenient for the respondent. The majority of the population is lie in the not so convenient.
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Table 4.2.17 Inquire the health of your business
Frequency Valid Never Irregular regularly Total 86 12 2 100
Percent 86.0 12.0 2.0 100.0
Valid Percent 86.0 12.0 2.0 100.0
Table 4.2.17 shows the MFIs ever conducted market survey to know the health of their customer s business. The majority of the population reply to this question in negatively.
Analysis of questionnaire Following is the analysis of few of the demographic variables used in our questionnaire.
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Table 4.3.1 Age of employee
Frequency Valid 18-25 25-35 35-45 45 or more Total 15 43 36 6 100
Percent 15.0 43.0 36.0 6.0 100.0
Valid Percent 15.0 43.0 36.0 6.0 100.0
During the process of data gathering, the researchers visited different branches of MFIs institution to get the questionnaire filled. After the data analysis the researchers learned that the most of experience employee working in the MFIs are of age 25-35 years.
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Table 4.3.2 Experience of employee
Frequency Valid 0-3 3-6 6-10 10 and above Total 14 65 12 9 100
Percent 14.0 65.0 12.0 9.0 100.0
Valid Percent 14.0 65.0 12.0 9.0 100.0
Table 4.3.2 shows the experience of the employee working in the MFIs. Table shows employees who are working in MFIs have the huge experience from 3-6 years.65% of the employees are having 3-6 years experience in MFIs.
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Table 4.3.3 Gender of employee
Frequency Valid Male Female Total 83 17 100
Percent 83.0 17.0 100.0
From date gathering researchers came to know that 83% of employees are male who are working in MFIs and rest of the 17% are belong to female who are working in the MFIs. Majority of the population working in MFIs belong to male.
Analysis of questionnaire: 61
Following is the analysis of questions used in the research questionnaire along with the pie chart illustration of each.
Table 4.3.4 Interest rate of MFI
Percent 90.0 10.0 100.0
From the table 4.3.4 shows what the institution thinks about their interest rate, is it appropriate or not. 90% of the employees suggest that it is appropriate interest rate which MFIs charged to their customer.
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Table 4.3.5 Scope of MFI Frequency Valid Yes No 11 Total 80 18 2 100 Percent 80.0 18.0 2.0 100.0 Valid Percent 80.0 18.0 2.0 100.0 Cumulative Percent 80.0 98.0 100.0
Table 4.3.5 shows that the majority of the employees response to yes there is scope of microfinance. While gathering data researcher came to know that MFIs are working hard to eradicate poverty from the society thats why there is definitely scope of microfinance
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Table 4.3.6 Factors for rapid Growth Cumulative Frequency Valid Low interest rate Availability Processing & sanctioning of loan Installment factors Total 12 100 12.0 100.0 12.0 100.0 100.0 5 49 34 Percent 5.0 49.0 34.0 Valid Percent 5.0 49.0 34.0 Percent 5.0 54.0 88.0
Table 4.3.6 shows that which factor is most crucial for the rapid growth of the MFIs, the most of employees suggest that there must be availability of the loan and 2nd most followed answer is processing and sanctioning of the loan. Because it takes some time to sanction the loan.
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Table4.3.7Conducted seminar Frequency Valid Regularly Irregularly Never Total 74 22 4 100 Percent 74.0 22.0 4.0 100.0 Valid Percent 74.0 22.0 4.0 100.0 Cumulative Percent 74.0 96.0 100.0
From table 4.3.7 researchers came to know that MFIs are working hard to give knowledge to people about MFIs and about their products. Most of the employees tell that they used to make market surveys related to awareness to the people about MFIs and their products.
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Table 4.3.8 Guide line to their customer
Percent 32.0 68.0 100.0
Table 4.3.8 shows that MFIs did not provide guide line to their customer about their business the answer of this question is 68% no, the majority of the employees tell that MFIs did not provide any help or guide line to their customer about their business and the rest of the 32% suggests that MFIs provide help and guideless to their customer.
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Table 4.3.9 Objectives of MFI Cumulative Frequency Valid To earn profit only To eliminate poverty To provide services only Total 19 66 15 100 Percent 19.0 66.0 15.0 100.0 Valid Percent 19.0 66.0 15.0 100.0 Percent 19.0 85.0 100.0
From the table 4.3.9 which gives a brief summary about the objectives of MFIs, their main objective is to eliminate poverty from the society. Most of the MFIs employees categorized the elimination of poverty is the main objective of the MFIs.
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Table 4.3.10 Help people in rural area Frequency Valid Yes No Total 91 9 100 Percent 91.0 9.0 100.0 Valid Percent 91.0 9.0 100.0 Cumulative Percent 91.0 100.0
The table 4.3.10 shows that the MFIs are working well to eliminate poverty from urban as well as urban area of the Pakistan. As already discussed in the table 3.4 the main objective of MFIs is to eradicate poverty so therefore MFIs are working well in rural area.
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Table 4.3.11 To help unemployed urban youth Frequency Valid Yes No Total 69 31 100 Percent 69.0 31.0 100.0 Valid Percent 69.0 31.0 100.0 Cumulative Percent 69.0 100.0
MFIs are major objective is to eradicate poverty from the society so MFIs are providing great help to the unemployed youth of urban as well as the youth of rural.
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Table 4.3.12 A major tool to eradicate poverty
Frequency Valid Yes 100
Percent 100.0
Valid Percent 100.0
Cumulative Percent 100.0
As mention in the above tables and pie charts which shows that the major objective of the MFIs is to eradicate poverty, while asking the employees that MFIs is a major tool of elimination of poverty 100% of the employees respond to yes.
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Table 4.3.13 Types of products Frequency Valid Only 1 2-3 More than 3 Total 19 74 7 100 Percent 19.0 74.0 7.0 100.0 Valid Percent 19.0 74.0 7.0 100.0 Cumulative Percent 19.0 93.0 100.0
Table 4.3.13 shows the 2-3 types of the products which are provided to the customers. 74% of the employees categorized the 2-3 types of the products to their customer.
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Table 4.3.14 Provide quick and easy processing Frequency Valid Yes No Total 77 23 100 Percent 77.0 23.0 100.0 Valid Percent 77.0 23.0 100.0 Cumulative Percent 77.0 100.0
Table 4.3.14 shows that according to employees of the MFIs they provide easy and emergency loans to their customers. While gathering data from employees researcher came to know that this is just a formality which has to be done by the Employees.
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Table 4.3.15 How long MFI provide loans Cumulative Frequency Valid 6-12 12 or more Total 79 21 100 Percent 79.0 21.0 100.0 Valid Percent 79.0 21.0 100.0 Percent 79.0 100.0
From the above table researcher came to know that the most of the loans are given to customer is for 0-6 months period. It is not a big loan thats why most of the loan are for the small time periods.
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Table 4.3.16 Conducted market survey to improve the quality
Frequency Valid Regularly Irregularly Total 79 21 100
Percent 79.0 21.0 100.0
Table 4.3.16 shows about the survey which MFIs done to improve their quality of the service. While gathering information from the employees researcher came to know that it is there foremost duty to done the market survey to improve their quality of service.
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Table 4.4 Age of customer * Awareness about MFI Cross tabulation Awareness about MFI Yes Age of customer 18-25 25-35 35-45 45 to above Total 2 3 3 3 11 No 5 7 12 15 39 Not Really 14 19 11 6 50 Total 21 29 26 24 100
From the above cross table 4.4 researcher came to know about the how much awareness is there in the customer. From the above table researcher came to know that most of the people didnt have awareness about the MFIs.
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Table 4.4.1Age of customer * Purpose of borrowing Cross tabulation Purpose of borrowing Starting a New Business Age of customer 18-25 25-35 35-45 45 to above Total 2 3 3 1 9 Stability of Expansion of Other 0 0 1 1 2 Total 21 29 26 24 100
existing Business existing business 10 15 11 6 42 9 11 11 16 47
From the given table 4.4.1 researcher came to know from 45 and above age of customer takes loan for the expansion of existing business. Followed by the stability of the business which is taken by the age of 25-35.
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Table 4.4.2 Age of customer * Amount of borrowing Cross tabulation Amount of borrowing Less than 20000 Age of customer 18-25 25-35 35-45 45 to above Total 6 4 4 6 20 20000 to 50000 3 5 4 9 21 50000 to 100000 7 14 13 3 37 100000 to 150000 5 6 5 6 22 Total 21 29 26 24 100
Above cross table 4.4.2 shows that from the age of 25-35 customers have taken the loan amount of 50,000 to 100,000 which is the highest loan category taken in the research.
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Table 4.4.3 Age of customer * Interest Burden Cross tabulation Interest Burden Somewhat Not satisfactory Age of customer 18-25 25-35 35-45 45 to above Total 18 25 21 22 86 Satisfactory 3 2 5 1 11 Satisfactory 0 1 0 1 2 Very Satisfactory 0 1 0 0 1 Total 21 29 26 24 100
Above table 4.4.3 which show the relationship between age and interest burden. This shows that the customer of age 25-35 feels that the interest rate is not satisfactory.
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Table 4.4.4Gander of customer * Amount of borrowing Cross tabulation Amount of borrowing 100000 to Less than 20000 20000 to 50000 50000 to 100000 Gander of customer Male Female Total 2 18 20 21 0 21 34 3 37 150000 18 4 22 Total 75 25 100
From the above table 4.4.4 which shows that male customers were more interested in taking loan while female are behind them. Male customers have taken the loan from range of 50,000 to 100,000.
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Table 4.4.5 Gander of customer * Penalty of Late Payment Cross tabulation Penalty of Late Payment No Gander of customer Male Female Total 0 2 2 Yes Litlle 57 16 73 Yes large 18 7 25 Total 75 25 100
From the above table 4.4.5 researcher came to know that male people find it more difficult to pay penalty as compared to females. In other sense male customer are not so good in paying their installments.
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Table 4.4.6 Occupation of Customer * Amount of borrowing Cross tabulation Amount of borrowing 100000 to Less than 20000 20000 to 50000 50000 to 100000 Occupation of Customer Hair Saloon Tailor Manufacturer Retailer Others Total 2 9 6 2 1 20 1 11 8 1 0 21 9 19 7 2 0 37 150000 20 2 0 0 0 22 Total 32 41 21 5 1 100
Given table 4.4.6 which shows that the occupation related to hair saloon have taken the highest amount of loan from 100,000 to 150,000.
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Table 4.4.7 Occupation of Customer * Purpose of borrowing Cross tabulation Purpose of borrowing Starting a New Business Occupation of Customer Hair Saloon Tailor Manufacturer Retailer Others Total 4 3 2 0 0 9 Stability of Expansion of Other 1 1 0 0 0 2 Total 32 41 21 5 1 100
existing Business existing business 15 12 10 4 1 42 12 25 9 1 0 47
From the given table 4.4.7 researcher came to know that the tailor was occupation which has taken the loan most for the purpose of expansion of existing business.
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Table 4.4.8 Occupation of Customer * Rate of borrowing Cross tabulation Rate of borrowing 20%-25% Occupation of Customer Hair Saloon Tailor Manufacturer Retailer Others Total 20 1 0 0 0 21 25%-30% 10 31 15 3 0 59 30%-35% 2 9 6 2 1 20 Total 32 41 21 5 1 100
The most of the interest rate 20-25% was paid by the hair salon. Hair salon has achieved the highest category of the interest paid in this study.
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Table 4.4.9 Occupation of Customer * Re borrow after repaying the first loan Cross tabulation Re borrow after repaying the first loan Yes Occupation of Customer Hair Saloon Tailor Manufacturer Retailer Others Total 13 20 8 3 0 44 No 18 20 12 2 1 53 Not really 0 0 1 0 0 1 Not at all 1 1 0 0 0 2 Total 32 41 21 5 1 100
Given table shows the mixer of both yes and no. whether the customers want to borrow it again or no? The answer was a mixer of no and yes its a ties between no and yes.
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Table 4.4.10 Age of employee * Experience of employee Cross tabulation Experience of employee 0-3 Age of employee 18-25 25-35 35-45 45 or more Total 1 3 10 0 14 3-6 12 31 19 3 65 6-10 2 5 3 2 12 10 and above 0 4 4 1 9 Total 15 43 36 6 100
From the above table 4.4.10 researcher came to know that 31 employees of the age 25-35 year were having the experience of 3-6 years in MFIs.
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Table 4.4.11 Age of employee * Interest rate of MFI Cross tabulation Interest rate of MFI Yes Age of employee 18-25 25-35 35-45 45 or more Total 12 40 32 6 90 No 3 3 4 0 10 Total 15 43 36 6 100
From the age range of 25-35 categorized that the interest charged my MFIs was sufficient.
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Table 4.4.12 Age of employee * Factors for rapid Growth Cross tabulation Factors for rapid Growth Processing & sanctioning of Low interest rate Age of employee 18-25 25-35 35-45 45 or more Total 1 2 2 0 5 Availability 7 18 19 5 49 loan 5 15 13 1 34 Installment factors 2 8 2 0 12 Total 15 43 36 6 100
From the age range of 35-45 of employee suggest that availability was the best objective for the rapid growth of the organization.
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Table 4.4.13 Age of employee * Conducted market survey to improve the quality Cross tabulation Conducted market survey to improve the quality Regularly Age of employee 18-25 25-35 35-45 45 or more Total 13 37 25 4 79 Irregularly 2 6 11 2 21 Total 15 43 36 6 100
From the given table 4.4.13 researcher came to know that from the age of 25-35 of the employee having view that MFIs conduct market survey on the regular basis.
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Table 4.4.14 Gender of employee * Experience of employee Cross tabulation Experience of employee 0-3 Gender of employee Male Female Total 12 2 14 3-6 52 13 65 6-10 11 1 12 10 and above 8 1 9 Total 83 17 100
Given table 4.4.14 shows that the male employees were having more experience in MFIs as compared to the females.
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Table 4.4.15 Gender of employee * Factors for rapid Growth Cross tabulation Factors for rapid Growth Processing & sanctioning of Low interest rate Gender of employee Male Female Total 3 2 5 Availability 41 8 49 loan 27 7 34 Installment factors 12 0 12 Total 83 17 100
From the given table 4.4.15 researcher came to know that the male employees were having view of availability is the most important objective of rapid growth of MFIs.
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Table 4.4.16 Gender of employee * Help people in rural area Cross tabulation Help people in rural area Yes Gender of employee Male Female Total 74 17 91 No 9 0 9 Total 83 17 100
According to the table 4.4.16 which shows that MFIs providing help to the people of rural according to the MFIs male and females employees.
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Table 4.4.17 Gender of employee * Conducted market survey to improve the quality Cross tabulation Conducted market survey to improve the quality Regularly Gender of employee Male Female Total 65 14 79 Irregularly 18 3 21 Total 83 17 100
While gathering date researcher came to know that MFIs were very keen about the market surveys which show in the given table that both male and female employees recommended that MFIs used to conduct market survey to improve their quality.
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Table 4.4.18 Experience of employee * To help unemployed urban youth Cross tabulation To help unemployed urban youth Yes Experience of employee 0-3 3-6 6-10 10 and above Total 9 48 8 4 69 No 5 17 4 5 31 Total 14 65 12 9 100
According to MFIs employees experience MFIs providing help to unemployed youth of urban as well as rural areas.
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Table 4.4.19 Experience of employee * Types of products Cross tabulation Count Types of products Only 1 Experience of employee 0-3 3-6 6-10 10 and above Total 1 10 4 4 19 2-3 12 51 6 5 74 More than 3 1 4 2 0 7 Total 14 65 12 9 100
While gathering date researcher came to know that most the employees suggest that there was just 1 product in MFIs but most of them suggest there are 2-3 products in MFIs.
Findings. Following are the major findings of the research.

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Mostly micro credit taken for the purpose of extension of the business is utilize in fulfilling the basic everyday needs The respondents were very much aware of the micro credit services offered by MFIs. Highest interest rate of about 30% is being charged on micro credit by MFIs. The researcher learned that the micro credit customer were more annoyed of paying the interest as compare to paying back the principle amount. Researcher came to know from the study that the interest charged by MFIs is appropriate. Mostly MFIs conducted seminars to educate their customers and other people. According to the MFIs micro finance or micro credit is the major tool to eradicate poverty. According to MFIs sanctioning and processing of the loan are the major factors of the rapid growth of microcredit. MFIs provide help to unemployed youth of urban as well as rural areas. In most of the cases microcredit is not playing its role of bring financial improvement in everyday life of is users. A very small percentage of microfinance customers are able to start a productive business from the amount borrowed.
Chapter 5
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Conclusion Microfinance is a useful system to reduce the poverty and make sure about basic requirements of life including education. Usually microfinance was providing very uniform credit products. The poor, need to various ranges of microfinance tools to be capable to build assets, steady spending and keep themselves against risk. Just Focus on customer sustainability is how institution can make sure that we are not just attainment more customers, but them, that and we that are we providing attend them them services during they need. to once we targeted liberty. their voyage economic
Secondly with microcredit as a stage to offer incorporated services enhance economies of extent for all the organizations occupied in trying to serve the same clienteles We can enhance the capability of the service offer to contact more customers and to target them more efficiently. With leveraged possessions assets, communications, knowledge, sharing channels, etc. Poverty is a great challenge for under developing nations. Pakistan is one of the victims of poverty. Developing process cannot be completed until the rural are developed. Microfinance consider as a tool to reduce the poverty. All over the world, attempts are doing to remove the poverty. Poverty provides access to financial services; microfinance plays an vital role to eradicate poverty. For example to generate income from a business helps not only the business movement develop but also contributes to domestic income and enhance its employees to improve the living standards and children education. All such finding help in rejecting the alternative Hypothesis while supporting the null research Hypothesis, which is micro credit, is not playing its role in poverty alleviation.
Recommendation
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Following are some of the recommendations the researchers believe can further improve the system of giving microcredit and its role in poverty alleviation.

Microcredit is not only an financial support. It should also offer facility structure and education programs for its target market. NGOs and other microcredit giving institutions should conduct workshops to develop or enhance earning skills among women. The researchers believe that instead of just giving them a fish to eat poor people should be taught skills to how to catch one by themselves. Once a micro credit customer has started his/her own business setup the institutes should keep regular check on their workings and give assistance when needed. MFIs should provide services through mobile units. SBP should improve regularity frame work and supervisory role in respects of MFIs MFIs should establish training institution for proper training of the staff. Government must make laws to enforce the MFIs for the efficient reduction in poverty.
References Agion, & Morduch. (2003). Microfinance, Where do we stand? UK: The British Association.
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Ahmad, S. N., & Gafoor, A. (2003). Role of microfinance in alleviating rural area . Akhtar, S. (2007). Trends in Regional Inequalities in Pakistan. Akhuwat.org.pk. ( 2009, December 17). History. Retrieved December 9, 2009, from Akhuwat: http://www.akhuwat.org.pk Asian Development Bank. (n.d.). Development of microfinance sector. Retrieved December 15, 2009, from Asian Development Bank: http://www.ADB.org.com B. Mcguire, P., & D. Conroy, J. (2008). Effects of micro finance of the 1997-1998 Asian financial crises. 221. Banuri. (2006). Imact of microfinance on poverty and income inequality , 135. Dhumale,R and Sapcanin. (2008). In islamic banking principles to microfinance. Retrieved from ruralfinance:http;//www.ruralfinance.org/servelt/binarydownloaderservlet? filename=1114499916629_WB_Isamic_MF_pdf Hassan, K., & K.lewis, M. (2007). Islamic Finance. In K. Hassan, & M. K.lewis, Islamic Finance (p. 500). U.S.A: The World Bank Weshington, D.C. 20433. Hulme, D. H., & Moore, K. ( 2006). Why has been a microfinance policy success in Bangladesh , 136. Kabeer. (2008). Microfinance Reporting Standards Initiative. 110. Kashf foundation. (2007, December). History. Retrieved December 17, 2009, from Kashf foundation: http://www.kashf.org Khan,M.A & Rahaman,M.A. (1998). impact of microfinance on living stanaderd and empowermwent. Kirzner. (1999). Journal of economic association Vol.35. Ledgerwood. (1999). Microfinance Institution and financial perspective. M. Datar, S., & J. Epstein, M. ( 2008). In microfinance clients must come , 99.
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Morduch & Armendariz, B. (2007). The economic of microfinance. In J. Morduch, & B. Armendariz, The economic of microfinance (pp. 129-131). Hong Kong: MIT. National Rural Support Programme . (n.d.). About NRSP. Retrieved December 17, 2009, from National Rural Support Programme : http://nrsp.org.pk Noor Muhammad, J., & chang, R. (2007). Journal of Management and Social Sciences Vol.3,. Poverty Alleviation causes and remedies 2001-2005 . Overseas Pakistani friends. (2008, August 24). causes of poverty in pakistan. Retrieved December 15, 2009, from Overseas Pakistani friends: http://www.opfblog.com Pakistan Microfinance Network . (n.d.). PRSP. Retrieved December 17, 2009, from Pakistan Microfinance Network : http://www.microfinanceconnect.com Pakistan Microfinance Network . (n.d.). sarhad rural support programme. Retrieved December 15, 2009, from Pakistan Microfinance Network : http://www.microfinanceconnect.com Pakistan Microfinance Network. (n.d.). Brief History. Retrieved December 17, 2009, from Pakistan Microfinance Network: http://www.bwtp.org.pk Peredo. (2003). Journal of management inquiry,Vol.12. Poverty in Pakistan. (n.d.). Retrieved from wikipedia: http://en.wikipedia.org/wiki/poverty-inpakistan PREM. (2002). Empowerment and poverty reduction. R. Khandker, S., Khalily, B., & Khan, Z. (1995). Gramen Bank Performance and sustainability. Rajagoplan, S., & Parikh, N. (2007). Impact of microfinance. Rauf, S., & Mahmood, T. (2009). Pakistan economic and social review volume 47 , No.1. Growth and Performance of microfinance in pakistan , pp 200. Reason for Poverty in pakistan. (2007). Retrieved from brecorder: http://www.brecorder.com/index/reason-for-poverty-in-pakistan.php
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Robinson, J., & Mair, J. (2005). Social entrepreneurship. In J. Robinson, & J. Mair, Social entrepreneurship (p. 280). Palgrave Macmillan. Rosic. ( 2004). Scaling up microfinance to increase access to financial services in Serbia , pp 210. Sapkot. (2008). Micro finance institution and its role in alleviating rural poverty in Nepal , pp 129. Seelos, C. (2005). Socail enterprepreneurship: Creating new business models to serve the poor. In C. Seelos, Socail enterprepreneurship (pp. 241246). Business Horizons, Setboonsarng, S., & Parpiev, Z. (2008). Microfinance and MDGs in pakistan , pp 159. Swope. (2004). Microfinance and poverty alleviation , pp 178. The world bank group. (2005, Augest). Pakistan Poverty Alleviation Fund Project. Retrieved December 12, 2009, from The world bank group: http://www.worldbank.org.pk Weiss and Montgomery. (2004). Microfinance and poverty reduction in Asia And latin America. ADB institution http://www.cgap.org/p/site/c/template.rc/1.26.1302/ (on April 15, 2011) (at 3:10:53pm) www.socialedge.org/.../russet-group-micro-finance-cooperative.doc (on April 13,2011) (at 1:11:25am) http://www.cgap.org/about/faq05.html (on April 14,2011) (at 8:44:15) http://www.answers.com/topic/microfinance?cat=biz-fin (on April 15,2011) (at 4:12:31 pm) http://www.khushhalibank.com.pk/factsheet.html (on April 16, 2011) (at 11:45:02 pm) http://www.microfinancegateway.org/files/27141_file_microfinsector.ppt (on April 16,2011) (at 9:02:25am)
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Effectiveness of various microfinance initiatives in Pakistan, downsides to microfinance and effective alternatives to microfinance.

(Banking and finance)

Muhammad Kamran shafi L1S09MBBF2040

These statements must be signed and dated.]

Certificate of Approval (Effectiveness of various microfinance initiatives in Pakistan, downsides to

_____________________________ Project Advisor [Name and Date]

CHAPTER ONE Introduction

1.1 History of Microfinance

1.2 What is Microfinance?

1.2.1 Microfinance Structure

1.2.2 Core values for Microfinance

1.2.3 Microfinance Products and Services

1.2.4 How Micro-Credit is Difference than Micro-Finance

1.2.5 Different Clients of Micro finance institutions

Farmers who are earning small income.

A. In city areas, microfinance activity is more different and include:

Shopkeeper, Provide services.

1.2.6 Benefits of Microfinance

1.2.7: Microfinance challenges and programs alternatives.

Non.approved institution desire not to be regulated

Microfinance institution management capacity is limited

Consumer financial literacy and business expiries are limited

Rural accesses to finance limited

Demand for Islamic law complaint microfinance is unmet

interest rates, as these are contrary with Islamic law.

1.3 Functions of Microfinance Bank

1.3.2 Basics of Microfinance

4. Not Just Credit

1.3.3 Distinctive features of Microfinance Banks

Lending Methodology A. Traditional Finance

Loan Portfolio A. Traditional Finance

1.4.1 Khushhali Bank

1.4.1 The First Microfinance Bank

1.4.2 Tameer Bank

1.4.3 Kashf Microfinance Bank

1.5.3 Kashf Foundation

1.5.4 National Rural Support Program (NRSP)

1.5.5 Sarhad Rural Support Program (SRSP)

1.5.6 Punjab Rural Support Program (PRSP)

1.6 Pakistan Microfinance Network (PMN)

CHAPTER TWO Literature review

CHAPTER THREE 3. RESEARCH DESIGN 3.1 What is microfinance?

3.1.1 Micro Finance in Pakistan

3.1.2 Microfinance Institutions

3.1.3 Microfinance channels

3.1.4 Objectives of Research

3.1.5 Problem Statement

3.1.6 Hypothesis Development

3.1.7 Research Design

3.1.8 Data Sources

Books Articles Reports Newspaper

3.2 Theoretical framework 3.2. Development Tools of Microfinance

3.3 Microfinance Models

3.4 Microfinance-Interest free (Islamic Microfinance)

1. Mudaraba (Participation financing):

3.6 Social Entrepreneurship

Table 4.1.1 percentage of respondent with respect to gender

Frequency Valid Male Female Total 75 25 100

Percent 75.0 25.0 100.0

Valid Percent 75.0 25.0 100.0

Cumulative Percent 75.0 100.0

Frequency Valid Yes No Not Really Total 11 39 50 100