NRSP Bank: equity investment to support microfinance in Pakistan

NRSP Bank was set up by its parent company, the NGO National Rural Support Programme (NRSP Foundation). It has built up a network of 154 branches serving 1.2 million depositors and 339,130 borrowers, with EUR 150m (PKR 29bn) of outstanding loans. 80% of NRSP Bank’s activity targets farmers, most of whom do not own the farmland. The bank has designed its flagship loan product for this client base, which aims to finance agricultural inputs.

The bank has developed with support from three international minority shareholders, which each own 16% of the capital: KfW, IFC and Acumen. They all became shareholders in 2011. 

At 31 December 2020, the bank had 3,165 employees, including 2,045 loan officers.

The operation involves Proparco’s acquisition of a 16% stake in NRSP Microfinance Bank Limited (NRSP Bank) through the buyback of the shares of KfW, which has been a shareholder of the bank since it was set up in 2011. NRSP Bank’s mission is to serve poor people excluded from the traditional financial system. The products offered by the bank are tailored to the needs of poor people: most of its clients benefit from microcredits without guarantees. Health, life and crop insurance is also offered with the loan free of charge. Developing branchless banking and Islamic finance is a major tool for fulfilling this mission. 

NRSP Bank also benefits from technical assistance. Following the successive crises (Covid-19, floods in 2022), this assistance aims to improve the institution’s risk management and resilience and define a new portfolio growth strategy.

 

By becoming a shareholder of NRSP Bank, Proparco will contribute to ensuring the sustainability of the socially responsible approach of one of Pakistan’s largest microfinance institutions, whose activity stands as an example in a country where the level of financial inclusion is one of the lowest in South Asia. 

The project will support local economic activity by developing the range of microcredits for small entrepreneurs in Pakistan, who are mainly in rural areas and operate in the agriculture sector. The financing operation for NRSP Bank should allow some 105,700 clients to benefit from a microfinance product, which will contribute to improving their living conditions.

The project will thereby contribute to SDGs n° 8 (Decent work and economic growth) and n° 10 (Reduced inequalities). Finally, Proparco will provide non-financial added value through the expertise of Proparco’s member of the institution’s Board of Directors.