Innovations - Microleasing
This paper describes the recent innovations in the microfinance sector in Pakistan:
- Establishing Khushhali Bank and First Microfinance Bank as ventures: this has have broken new ground in the delivery of financial services in Pakistan;
- Including microfinance funds as wholesale facilities and protection mechanisms for borrowers;
- Integrating financial services and skills training for women with the objective of eliminating child labor in carpet weaving;
- Banks' hiring development professionals to combine local development knowledge with commercial expertise;
- Developing products such as emergency loan and life insurance products;
- Developing frameworks to share best practices.
The paper also presents the strengths of lease finance, which appears to be the most suitable financing instrument for developing micro and small enterprises in Pakistan:
- Does not require collateral;
- Leasing is the same as term finance;
- Evaluation of risk relies on alternate criteria;
- Documentation is simple;
- It has considerable tax advantages;
- Leasing can operate in harmony with the Islamic (Sharia) law.