RAWALPINDI, July 12: The government is promoting micro- finance banking to end exploitative money lending culture in the country, Finance Minister Shaukat Aziz said here on Friday.

He was speaking at the inaugural ceremony of the First Micro-Finance Bank branch at Chandni Chowk.

The minister said the money lenders through strict lending conditions created numerous problems for the poor, and added that once the micro-finance banks were fully established, the lending culture might end automatically.

He said despite huge potential for micro-finance sector, its coverage had remained low.

“Khushali Bank has opened branches in 30 districts, but still there is a lot of scope,” he said.

Poverty, he said, was a complicated issue and was pervasive in developing regions particularly South Asia. Micro-Finance Banks can play a vital role in alleviating poverty as helping the poor with small amounts can bring about dramatic changes in their lifestyle, he said.

Mr Aziz urged the micro-finance banks to keep their interest rates low so that the poor were not over burdened.

Mentioning the government’s initiatives for poverty alleviation, he said programmes like Khushal Pakistan Programme, revamping of Zakat system, food support programme and promotion of micro-finance sector all directly address to the poverty issue.

Replying to a question, he said the irritants being faced by the small and medium sector in exploiting their full potential are being reduced.

Recalling the government steps in this direction, he said tariffs relating to the small and medium industry were being reduced, the input costs were being slashed, technical assistance was being provided through SMEDA and financial help by the SME Bank. “All these steps are translating into increased business of small and medium industries,” he added.

About the proposed fiscal responsibility law, he said it was aimed at creating an environment for stopping uncontrolled borrowing and to check economic mismanagement by the government.

On this occasion, he opened an account with the bank by depositing Rs100 and became the first customer of the branch.