Small loans: BoK starts Islamic microfinance service

Rs1 billion allotted by provincial government for the scheme.

PESHAWAR: Bank of Khyber (BoK) has started its Islamic microfinance service titled ‘Raast Islamic Bankari’ to provide small and interest-free loans to people of the province.

A memorandum of understanding was signed between officials of the bank, which is chartered by the government of Khyber-Pakhtunkhwa, and the finance department at a local hotel on Monday night. Chief Minister Pervez Khattak and Minister for Finance Sirajul Haq were also present on the occasion.

The provincial government has allotted Rs1 billion for the Islamic microfinance project through which applicants will get loans ranging from Rs10,000 to 5 million. The loans will be transferred to the bank in installments.

BoK has 101 branches throughout Pakistan and has been offering Islamic banking in 40 branches for the past 10 years. It started its Islamic banking service during the tenure of the Muttahida Majlis-e-Amal (MMA) provincial government.

“BoK is the first government bank in the country that offers Islamic microfinance facilities to the public,” said Minister of Finance Sirajul Haq while speaking at the MoU signing ceremony. “This is not a new experiment but a tried and tested formula which never fails to provide relief to the common man.”

Citing the role of small loans in the economic uplift of Bangladesh, Haq said, “Microfinance schemes [initiated] by Grameen Bank provided a solid economic foundation to Bangladesh.”

He added the scheme will help mobilise capital in the society and prevent exploitation at the hands of the traditional banking system.

Khattak also lauded the provincial government’s efforts to eradicate corruption and provide a suitable environment for investments and sustainable economic development. He said the loans could be utilised for agriculture, starting a business among other ventures and will enable the youth to get better opportunities.

Published in The Express Tribune, July 23^rd, 2014.

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