CASE STUDY

KASHF BANK

ANSWER 1:

Kashf Foundation was set up by Roshaneh Zafar in year 1996. In year 2008 to take advantage of deposit
mobilization opportunities in order to grow its institutional network and also to provide saving
mechanism, Kashf Foundation decided to set up Microfinance Bank, but when they shifted from NGO
body to the banking sector it had to face many difficulties such as:

First problem Kashf Microfinance Banc face was in developing a new business model. Kashf bank
practices were adopted by Kashf Foundation, as they have to keep their social mission as well as making
profit, by which they were facing a great problem in their practices of giving loan, and rate of non-
performing loan increase as they were also unable to recover their loans due to which Kashf bank equity
get deplete.

Secondly with these practices Kashf bank also struggle in meeting with rules and regulation imposed by
State Bank of Pakistan. Kashf bank was unable to meet its Capital adequacy ratio and Minimum Capital
Required by bank to run their operations.

Political interference also effected the position of Kashf bank. A member of the national Assembly was
said to have convinced some borrowers that they didn’t need to repay their loans, this news rapidly
spread among the rest of the borrowers through their social networks which leads to massive default.
Rumors also spread regarding Roshane Zafar death which discourage borrowers to return their loans.

ANSWER 2:

Kashf Bank set up on the vision of a NGO its motive was to promote female borrower to promote and
encourage them for start up business, but in Pakistan the scenario is different mostly successful
businesses over here run by men. Kashf bank need to come up with new strategies on providing
organized loans.

Following the practices of NGO, staff of Kashf bank was also not trained in managing the loans. Training
of the staff needs to be done or staff needs to be hired according to the banking sector, who knows how
to penetrate market, to whom loans can be given and how the recovery strategies will be made.

Last but not the least by 2012 Kashf bank continued to have only one lending product and that was its
individual loan. It had also not introduced an insurance product. For further growth and reach they
should come up with new products to attract more deposits but they were confused in NGO and
Banking body.
ANSWER 3:

Kashf bank position could get better if they completely adopt the Microfinance banking body. When
they were NGO their performance and practices were favorable. They never lack in capital generation,
mostly they get it by charity, Government loans and NGO funds. But when they started Banking body
things also started changing because the mind set was of NGO, which is different from this sector. Kashf
Bank should start a bank with same vision but with new and different mission which emphasis on
Organized loans, Managing recovery introduction of new products and market accordingly its brand
Image and position.

ANSWER 4:

Muddasir Aqil received various offers due to its Kashf Foundation name and position, some of were from
local telecommunication company that wanted the opportunity to explore branchless banking by taking
over a local MFB. Second was a consortium of local investors that wanted to exploit Kashf’s brand name.
Third was FINCA an international Micro Finance bank.

Muddasir Aqil was considering few factors in choosing between the options, which include strong
commitment to the vision of the company, Expert in managing double bottom-line situation and knows
how to deal with a banking body, otherwise unexperienced body will ruin the position of Kashf bank in
future as well. So Muddasir Aqil decided to go with FINCA.

FINCA was new name in Pakistan but has widely respected brand image in international community. It
also has strong commitment to the goal of financial inclusion. A ley component of FINCA’s international
growth strategy was to support local institutions in transforming from microfinance NGOs into double
bottom-line licensed financial institutions. So Muddasir Aqil was convinced with FINCA and decided to
go with it.