Design of FIP

Rationale

To reach three million microfinance borrowers by 2010, it is estimated that the microfinance providers will require timely and predictable availability of over 75 billion Pakistani Rupees (£600m) in coming years. In order to reduce the resource gap, FIP will support structuring of a market based credit enhancement facility that will facilitate partnerships between commercial banks and microfinance institutions.

Benefits

• Help to ameliorate capital market imperfections
• Build confidence of financial institutions as this facility will offer first loss guarantee
• Improve liquidity of MFIs via different sources of market-based commercial funding