Tameer Bank's Experiences with Mobile Banking

Shahid Mustafa[1]

Although Pakistan has several dynamic metropolitan centers, the majority of the population lives in rural areas, much of it far away from urban settlements. The rural population, predominantly poor, is widely unserved by the formal financial sector. This article explores how Tameer Bank aims to serve the rural poor by employing modern communication technologies: The mobile phone is the cornerstone of Tameer Bank's approach to outreach into the countryside.

Access to Finance: The Case of Pakistan

The population of Pakistan is about 175 million, making it the sixth most populous country in the world. The rural population is almost 64 percent of the total population.

However, historically, the rural sector has suffered from policy neglect and the weak implementation of delivery systems for financial services. The services provided have been inadequate, inconvenient, and unaffordable. In relative terms, most attention has been paid to the provision of agricultural credit and the mobilization of deposits from wealthy people in rural areas. The provision of insurance, credit for non-farm purposes and for the landless and small farmers, and the mobilization of savings of the poor and the poorest in rural areas have not received much attention from policymakers. The lack of appropriate saving products, the almost total absence of insurance, limited access to credit for the poor and rural, non-farm activities, and an inefficient payments system has deprived rural people of productive employment, as well as high and broadband growth. As a consequence, the rural economy is mired in a vicious circle of low growth, low productivity, low savings, weak employment generation, and rising


As depicted in Figure 1 and Figure 2, the average Pakistani household remains outside the formal financial system, saving at home and borrowing from family or friends. Fourteen percent of Pakistanis use a financial product or service of a formal financial institution (including savings, credit, insurance, payments, remittance services). When informal financial access is taken into account, 50.5 percent of Pakistanis have access to finance. Informal access can occur through the organized sector (though committees, shopkeepers, moneylenders, hawala/hundi money transfers, and so forth), or informally through friends and family. In comparison, 32 percent of the population has access to the formal financial system in Bangladesh; this figure is 48 percent in India and 59 percent in Sri Lanka.[3]

Fig. 1. Financial Inclusion Scene in Pakistan[4]

Financial access is low among the poorer, women, small and microenterprises, and in rural areas. Yet market studies suggest they are viable customers. Most formal financial products remain high-end, limited to urban, rich, educated males employed in the formal sector. The formal sector could learn a lot from and partner with informal providers; their services are perceived as being more geographically accessible, less complex, having fewer requirements, and being easier to understand.

Fig. 2. Financial Services – Demand and Supply

  • [1] Tameer Bank.
  • [2] State Bank of Pakistan. Excerpts from the report of the Committee on Rural Finance.
  • [3] T. Nenova, C.T. Niang, and A. Ahmed, “Bringing Finance to Pakistan's Poor: A Study on Access to Finance for the Undeserved and Small Enterprises”, May 2009.
  • [4] Ibid.
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