ISLAMABAD: Pakistan’s HBL Microfinance Bank (HBL MfB) and Standard Chartered have signed risk sharing agreements (RSA) with the International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets.
HBL’s agreement, which is supported by the Private Sector Window of the Global Agriculture and Food Security Program (GAFSP), will allow HBL MfB to share 50 percent of the risk on its microfinance loan portfolio of up to $80 million with IFC on an unfunded basis.
The collaboration aims to enhance access to finance for smallholder farmers and microenterprises across the country, with a strong focus on women entrepreneurs.
“This RSA is another milestone, reinforcing the Bank’s legacy of innovation and leadership in addressing the evolving financial needs of underserved communities,” HBL said in a statement.
“By being the first microfinance bank to establish an agreement on such a scale, HBL MfB is not only pushing boundaries but also redefining industry standards, ensuring that microfinance remains a catalyst for empowerment and economic growth.”
HBL said the RSA exemplified the bank’s approach toward leveraging strategic partnerships to strengthen financial resilience, expand lending capabilities, and maintain sustainable growth.
“This partnership with IFC is a testament to our commitment to financial inclusion. The facility serves as a replicable model for strategic partnerships that mitigate market challenges while driving sustainable development,” Amir Khan, President and CEO HBL Microfinance Bank, said in a statement.
“By pioneering this Risk Sharing Facility in the microfinance sector, we are ensuring that underserved segments of the society — especially small business owners and farmers, particularly women, have access to the capital they need to thrive. We are thankful to IFC for their trust in us and look forward to the growth and progress it will bring for underserved Pakistanis.”
Momina Aijazuddin, Regional Head of Financial Institutions Group at IFC, said boosting access to finance, especially for smallholder farmers, small businesses and women, could be a “gamechanger” in Pakistan.
“With this in mind, IFC is excited to support this pioneering risk sharing facility which aims to de-risk HBL MfB’s on-lending activity to its microfinance clients and support critical growth opportunities in agriculture, entrepreneurship, and women’s empowerment,” Aijazuddin said.
“This agreement will accelerate financial inclusion, and further HBL Microfinance Bank’s mission of creating a more inclusive and resilient financial ecosystem in Pakistan.”
Separately, Standard Chartered said in a press statement that the bank and the IFC are looking to enhance its existing un-funded Risk Participation Program from $200 million to $400 million to boost access to trade finance.
“The enhanced facility will enable SC Pakistan to continue to support short-term trade and working capital facilities for key large local corporates and exporters based in Pakistan,” it said.
It said the program will leverage the IFC and Standard Chartered’s long-standing relationship with export-based and large-scale manufacturing industries in Pakistan through the enhanced availability of trade and working capital loan facilities, including supply chain financing and sustainable finance product suites.
The bank said the program will help the generation of foreign exchange inflows, describing them as a key driver of sustainable economic growth in the country.
“This collaboration with IFC enables us to support our clients in growing their businesses and strengthening their growth potential.” Rehan Shaikh, CEO and head of coverage of Standard Chartered Pakistan, said.
Despite challenging macroeconomic conditions, microfinance banks (MFBs) have continued to expand their outreach to the low-income population of Pakistan. Although MFBs account for only 1.3 percent of total financial sector assets, they have a broad customer base. Over the past five years, MFBs’ total assets grew by an average of 19.1 percent annually, according to government data.
