Microfinance Banks with branchless banking services have closed over 1.6 million savings accounts, which were inactive for a considerably longer period of time with no transactional activity.
The reduction of m-wallet savings accounts has affected the microfinance banking sector which experienced massive closure of accounts after a long time.
It had experienced consistent growth in the past decade by attracting customers towards new accounts through a relatively convenient process for variable profit rates.
According to Pakistan Microfinance Network, the overall saving accounts maintained by microfinance banks, including m-wallet accounts of branchless banking, were reduced to 37.7 million from 39.6 million by the end of June 2019.
The permanent closure of savings accounts was a part of the correction drive carried out in the banking industry in recent months, done through biometric verification of customers.
Despite this decline in m-wallets (savings accounts), microfinance banks with branchless banking services remain the market leader in terms of active savers with a share of 42.7%.
The branchless banking companies generated m-wallet accounts of more than 50 million users including current and savings accounts, mainly due to the wide presence of footprints of more than 0.4 million branches across the country.
Nearly half of these accounts were termed as inactive with more or less no transactional activity for many months. However, companies continued to allure their customers through incentives for using their m-wallet accounts by saving money or using them for shopping, payment or transfer of money.
State Bank of Pakistan (SBP) has taken strict measures to streamline the banking system across the country including the microfinance sector. The Securities and Exchange Commission of Pakistan (SECP) has also been very active in streamlining the operations of the microfinance sector.
A few months ago, the microfinance sector also witnessed a major phase of correction which caused the closure of over 400 branches across the country. The geographic footprint was decreased due to the increased security and administrative requirements set out by the regulator for branches. The number of branches being operated by microfinance banks and microfinance institutions stand at 3,892.
Source: Pro Pakistani