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.

Developing A Hybrid Institution:

Creating Hybrid organization, and maintaining stability between NGO and

Commercial banking is a real challenge.

State Bank And Other Regulatories:

Terms and conditions for banking is alot different than NGO's. It is really
diificult for small banks to operation under such strict rules. For promiting
customers interests maintaining order and liquidity positions are 2 important
factors.
Microfinance bank whose objective is to provide services to small buainess and
humanity as well sometimes issue less secure short terms loans that affects the
profitability.

Mindset and performance are not according to Central bank.

It is difficult to move from non profit organization to a bank because the model
of Non profit organization is that they get money from charity, and for bank
they earn through fixed deposit, share holders etc.
They cannot earn welfare and distribute it on widow or society it is very
dangerous for business.
Registration of profit making business is not possible if they earn from it and
disturbe it for humanity SBP ans SECP does not allow it
 2. What steps can Kashf Bank take in order to strengthen its
organizational capability after moving from an NGO to a banking
status?

General Guidlines

Kashf bank has some unique types of brands that it is impossible fir the other
microfinance banks to have. It is considered on a national and international
level brand. It is really easy to start little investment with little risk with this
account. Securities will help in providing public services and also strict in
following terms and conditions.

Experienced CEO should be hired:

The Bank can appoint the CEO who have extensive experience in hire positions.
Although experience matters but the operations are different for microfinance
banks.

Appointment of new employees:

For a profit making structure you should have a exact mind for it. It is way too
complicated and time taking for staff to convert from NGO to commercial
decorum

Relationship with clients:

Staff should be provided training to handle the portfolio and also maintaining
good relationship with customers.Specially for group loans and where the
gurantee is required

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?

Board do not wanted to loose and wants to preserve Kash's vision and its
identity Also to keep control on the current board members while maintaining
their control on Kash

Mudassir Aakil should suggest two options, telecommunication and finca.

Telecommunication is better option as Kashf as option to work as branch
banking too. working as a branch kashf can also fulfil its regulatory obligation
meanwhile it will help kashf for achieving branch baking option.

second suggestion to convert kashf into finca will help both the origanization in
one another way.