Pakistan: Improving Access to Financial Services (Phase I) Program

Sovereign Project | 39492-013

Summary

The goal of the proposed Program is to assist the Government to reduce poverty, build an inclusive financial sector, and promote sustainable economic growth by using technology and applications to lower cost of delivery of financial services and to improve the efficiency of these services. The program's objective is to ensure access to sustainable institutional financial services for most poor and low-income households and their microenterprises at competitive prices. The program will support the Government to improve the performance and efficiences of the financial sector; promote diversification and innovation in product and services delivery; and increase outreach in rural and remote areas. Private sector participation and innovation in the delivery of products and services will be supported including savings services, transfer remittance services, and products and services that are Sharia (Islamic Law) compliant.

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Project Name Improving Access to Financial Services (Phase I) Program
Project Number 39492-013
Country Pakistan
Project Status Closed
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
TA 4894-PAK: Improving Access to Financial Services
Japan Special Fund US$ 2.00 million
Loan 2291-PAK: Improving Access to Financial Services (Phase I) Program
Ordinary capital resources US$ 300.00 million
Loan 2292-PAK: Improving Access to Financial Services (Phase I) Program
Asian Development Fund US$ 20.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Finance - Finance sector development
Gender Equity and Mainstreaming
Description The goal of the proposed Program is to assist the Government to reduce poverty, build an inclusive financial sector, and promote sustainable economic growth by using technology and applications to lower cost of delivery of financial services and to improve the efficiency of these services. The program's objective is to ensure access to sustainable institutional financial services for most poor and low-income households and their microenterprises at competitive prices. The program will support the Government to improve the performance and efficiences of the financial sector; promote diversification and innovation in product and services delivery; and increase outreach in rural and remote areas. Private sector participation and innovation in the delivery of products and services will be supported including savings services, transfer remittance services, and products and services that are Sharia (Islamic Law) compliant. Increased access to a range of financial services on a sustainable basis will enable the poor to engage in income generating activities, thereby reducing poverty and vulnerability. It will support the Government's core reforms to increase access and accelarate growth nationwide, including programs for literacy.
Project Rationale and Linkage to Country/Regional Strategy Background/linkage to country/regional strategy: Poverty reduction is established as an overarching objective of the Government of Pakistan. With growing income disparity of the population, the importance and role of microfinance is well recognized along with the urgent need for greater outreach of sustainable financial services in rural and remote areas. In 2000, the Government launched the Microfinance Sector Development Program (MSDP) that concentrated on the establishment of a single microfinance institution, the Khushhali Bank (KB), the first microfinance bank in Pakistan. The MSDP also supported development of legal frameworks, which included the ordinance to establish KB and a separate ordinance to govern the establishment and operation of all other microfinance banks. The MSDP is ongoing and scheduled to be completed by 2007. The abundance of subsidized credit line has not resulted in the envisioned outreach or provision of financial services needed by the poor. A broader scope of measures, encompassing microfinance and also reaching beyond to include such fundamental issues such as property rights, land registration of the poor and private sector participation is required for achieving an inclusive financial system. The Pakistan Country Strategy and Program Update (CSPU) 2006-2008 broadly support expansion of the outreach of small and medium-sized enterprises and microfinance services, and strengthening institutions with private sector participation. The Government request for support for improving access to financial services is within this overall framework of country assistance to Pakistan for development and poverty alleviation, and complements other ongoing ADB assistance in the financial sector.
Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Islamic Republic of Pakistan
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services Not applicable
Procurement In accordance with the simplified Disbursement Procedures and Related Requirements for Program Loans, procurement of goods and services produced in and originating from ADB's member countries will be made with due consideration to economy and efficiency in accordance with standard Pakistan public sector procedures and normal private sector commercial practices acceptable to ADB.
Responsible ADB Officer N. Peter Knoll
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of FinanceMr. Muhammad Iqbal Hussaininv@isb.comsats.net.pkMinistry of Finance
Timetable
Concept Clearance 30 Jun 2005
Fact Finding 04 Jul 2006 to 20 Jul 2006
MRM 11 Oct 2006
Approval 14 Dec 2006
Last Review Mission -
PDS Creation Date 01 Mar 2006
Last PDS Update 16 Apr 2010

Loan 2291-PAK

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Dec 2006 20 Dec 2006 10 Jan 2007 31 Dec 2008 - 27 Jun 2008
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 300.00 Cumulative Contract Awards
ADB 300.00 14 Dec 2006 300.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 14 Dec 2006 300.00 0.00 100%

Loan 2292-PAK

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Dec 2006 20 Dec 2006 10 Jan 2007 31 Mar 2007 - 12 Jan 2007
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 20.00 Cumulative Contract Awards
ADB 20.00 14 Dec 2006 20.08 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 14 Dec 2006 20.08 0.00 100%

TA 4894-PAK

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Dec 2006 29 Dec 2006 29 Dec 2006 31 Mar 2009 30 Sep 2009 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
2,000,000.00 0.00 0.00 0.00 0.00 0.00 2,000,000.00 13 Dec 2006 1,957,653.81

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