Microfinance landscape: Opening an account within a minute

By Kazim Alam

KARACHI: If one is to take the CEO of Pakistan’s largest microfinance bank at his word, the extent of financial inclusion in the country is going to expand by leaps and bounds in coming months.

One of the key measures of financial inclusion in an economy is the number of bank accounts. And a lot of bankable people remain unbanked in Pakistan mainly because of tedious form-filling procedures imposed in the name of know-your-customer (KYC) requirements.

But thanks to the biometric identification devices currently being installed for SIM cards across the country, the microfinance landscape in Pakistan is going to change forever, according to Tameer Microfinance Bank CEO Nadeem Hussain.

“By the end of the year, people will be able to open an account with us within one minute at more than 12,000 locations across Pakistan,” Hussain told The Express Tribune in an interview.

In other words, all the paperwork involved in opening a bank account – such as arranging for guarantors and photographs, filling in application forms and waiting in line for their submission – will practically be reduced to zero after online verification of personal data commences formally.

Currently, the microfinance penetration rate in Pakistan is only 11.5%, with the number of active micro-savers in excess of 7.3 million. The quarter-on-quarter increase in the number of active micro-savers as on June 30 was a staggering 25%.

According to Pakistan Microfinance Network (PMN), the increase in deposits during the last quarter was driven by Tameer Microfinance Bank that added 1.3 million new depositors and deposits amounting to Rs961 million. With 2.6 million depositors, Hussain’s bank is the largest provider of micro-savings in Pakistan.

He said microfinance banks will be able to open bank accounts based on customers’ thumb impressions through real-time biometric verification from the National Database Registration Authority (NADRA). “All our agents will have to do is take your thumb impression, and you’ll have your bank account ready within a minute,” Hussain said.

There are 55,000 agents associated with Tameer Microfinance Bank across the country. But only 1,000 of them currently have the equipment that can process customers’ photographs and computerised national identity cards. But with the installation of new biometric identification devices, account-opening procedures will become simplified to the extent that it will involve no paperwork at all.

But what next? Hussain says customers will then be tempted to populate their accounts once they realise its features that range from no-minimum balance requirement to sizeable profits offered on micro-savings.

“Getting into the tax net isn’t a worry for our potential customers. Their income isn’t taxable anyway,” he said.

Published in The Express Tribune, September 23rd, 2014.


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