Assignment # 2

Case Study
From Kashf Foundation to Kashf Microfinance
Bank - Changing Organizational Identities
Student Name: Waqar Mansoor (62790)
Course Name: SFAD
Term: Fall 2020
Instructor: Dr. Arsalan Hashmi
 1. Analyze the difficulties institutions like Kashf Microfinance Bank face in
moving from the NGO realm to the banking realm, while maintaining
their social mission.

Building a Hybrid Organization

It is the real challenge to build hybrid organization and to make balance

between NGO and in commercial banking.

SBP and regulatory compliance:

NGO’s have different rules and regulations, Banking regulations is completely

different than NGO’s. In banking there are many tough regulatory
requirements that become tough for small bank and for those banks facing
difficult time. SBP may close such bank. Minimum capital requirement and
capital adequacy ratio are two main requirements to take care the interest of
investors and customers.

Micro finance banks with social missions to serve humanity, normally come to
non-performing loans or loans with low return that hurt profitability.

Mindset and skillset is not according to bank

Board of directors, management and staff don’t have experience and mind set
to run an profitable organization. Organization modal is completely different
from NGO to bank. In NGO’s, source of on income is donations that help to
serve peoples and in business modal of bank, money comes from investors,
shareholders, loan form bank consortium, direct injection of money.

In banking modal they can not receive such donations and for social mission
they lend money to empower women and do not invest the money in
profitable share and securities that increase their risk.

It is not possible to register the organization as profitable business and instead

of profitability they do humanity. Various laws and regulations of SBP, SECP
and other govt. institution can’t do for the stake of depositor’s money or loan
providers money.
 2. What steps can Kashf Bank take in order to strengthen its
organizational capability after moving from an NGO to a banking
status?

General strategy

Kashf Bank has a image of brand unlikely to other micro finance banks. Kashf is
a nationally and internationally recognized brand. Kashf bank can easily start
micro credit portfolio and to balance with low risk govt. securities. This will
allow Kashf to remain on social cause and fulfill the requirement of the
regulations.

Appoint experienced CEO:

Bank can appoint CEO who has experience on top positions of micro finance
bank. Experience of conventional banking does matters but strategies and its
effects are different of micro finance bank.

Appoint New Staff:

For profit making organization there must be a mind set for profitability. If staff
transfer from NGO to bank. It will difficult to change the mindset and it will
take time to shift NGO mode to banking mode.

Client relationship management:

Staff must be trained to deal with loan portfolio and to develop close
relationship with clients. Especially in group loan, loan provided to group of
women with cross guarantees on each other’s loans. Otherwise, its individual
loan, the bank focus mainly on repayment and cash flow capacity of clients.
3. Evaluate Kashf Microfinance Bank’s position in light of its external
environment and consider whether it could have steered its organizational
course any differently to avoid the situation it found itself in late 2012.

Kashf bank has facing difficult time due to regulatory requirement of SBP to
meet MCR and CAR. For this Kashf has following option.

Invite local institution to purchase shares of Kashf bank. This can have the
brand name of Kashf. Branch less banking system can be introduced with
telecommunication company by injection of capital. One consortium of bank is
also interested for Kashf bank. All options can reduce the existing board
existence. And representation of others will be included.

FINCA is also interested to takeover Kashf and want to change the name as
FINCA. This is would eliminate the existence of kashf and board are not
prepared for this. This will be end of all effort and vison of Kashf for women
empowerment. FINCA want to use the kashf existence to enter in Pakistan
market.
Circumstances are better if Kashf has done the following things because Kashf
Bank has a image of brand unlikely to other micro finance banks. Kashf is a
nationally and internationally recognized brand. They should use their brand
value. They should introduce such products that balance the risk of social
effects. Like insurance product saving scheme. Kashf bank can easily start
micro credit portfolio and to balance with low risk govt. securities. This will
allow Kashf to remain on social cause and fulfill the requirement of the
regulations.

Bank can appoint CEO who has experience on top positions of micro finance
bank. Experience of conventional banking does matters but strategies and its
effects are different of micro finance bank. Training and development of
employee was must in order to change their mind and skill set from NGO to
bank.
4. What are the factors Mudassar Aqil, the CEO of Kashf Microfinance Bank,
should consider in choosing between the investors the Bank has been
approached by? What should be his final recommendation to the Board?

Secure the kashf existence and its vision because board never want to lose the
Kashf.

Take care the current board of directors’ positions and their share holding also
their control on Kashf.

Mudassar aqil should recommend two options one is the telecommunication

opportunity and the other one is FINCA. The telecommunication opportunity is
better in this way Kashf can work branch less banking this will not only help to
meet regulatory requirement but also help to come in branch less banking.

The other recommendation to renegotiate the FINCA to change kashf to Kashf

FINCA. This will somehow fullfill the both organization requirements.