Design of FIP

Rationale

Continued low levels of financing to small enterprises and rural population pose several challenges to sustainable growth in Pakistan. FIP will establish a mechanism for helping to alleviate constraints on access to credit via guarantee scheme for small business and rural finance. The most common constraints include a) inability of small enterprises to offer sufficient or adequate collateral against the loan; b) lack of accounting records; c) unfamiliar territories or industries; and d) additional informational asymmetries that increase risk for lenders.

Benefits

• Support in-depth analysis of different approaches to enhance market based solutions to improve financing to small enterprises and rural areas
• Review options of venture capital financing and possibilities of replication of credit union models in Pakistan
• Improve liquidity of MFIs via different sources of market-based commercial funding
• Support in-depth analysis of different approaches to enhance market based solutions to improve financing to small enterprises and rural areas.
• Analyze innovative options of venture capital financing and possibilities of replication of credit union models in Pakistan.
• Contribute to anti money laundering efforts by supporting formal, regulated mechanisms for remittances and by building the Know Your Customer capacity in the banking sector.
• Further explore documentation of individuals by expanding the outreach of National Identity Cards.
• Facilitate interventions for cost effective and productive uses of remittances and Islamic Banking products for the poor.