THE conventional commercial banks, commanding almost 95 per cent of the total banking sector assets are operating in Pakistan with a peculiar sophistication and a totally profit- driven approach. They have thus created an image which prevents the general public to have an easy access to these financial institutions.

The design and the lay-out of its branches, the atmosphere created through various deterrents meant for security purposes, the way staff deals and above all, the complicated procedure for acquiring different services spelled out through innumerable brochures and leaf-lets, make a poor person feel that as if he/she has entered a maze.

The sole purpose of launching micro-finance banks, both in public and private sector, was to promote micro-businesses among the disadvantaged segments of the population by making available banking services matching their peculiar needs.

Accordingly, these banks must develop a culture conducive to the total welfare of their clients and must create an environment whereby clients would avail the desired services with total confidence and perfect ease.

The cultural environment is a composite of various ingredients like management philosophy, nature of business, targeted clients, systems and procedures, human resource development policy and of course, the design and lay-out of its premises. For the micro-finance banks which aim at empowering the poor by providing micro-loans for setting up micro businesses and inculcating saving habits, the total atmosphere must be poor- friendly.

It is imperative for these banks to ensure accessibility of their services to the targeted clients with an image of friendliness. As such, branches of these must be located in easily accessible areas and housed in buildings with simple design and lay-out.

Decentralisation or delegation of decision-making powers down the line should be the very basis of management policy. Unlike conventional banks, their policy should be to provide services at door step of clients with reasonable costs. In fact, micro-financing is all about keeping economic mechanism of the poor house-holds, smooth and efficient.

As such, all efforts should be geared towards continuous prosperity of the down- trodden and ultimately of the country as a whole. To ensure sustainability of the operations, pricing of services should be fixed keeping in view the relevant markets and the affordability of the targeted people in general.

Since in terms of Micro Finance Ordinance of 2002, major functions of micro finance banks are deposit-taking and financing micro businesses, they need to develop such products (saving as well s credit schemes) which offer maximum satisfaction to the targeted segment of client. Besides, ongoing efforts are desired for continuous improvement of the products to cater to the changing needs of the clients.

In this regard propensity and capacity to save, general nature of businesses in vogue with relevant segments of population, size and duration of the credit required and general economic conditions should be the deciding points while developing a new product or making improvement on existing products. As such, alongside development of new products /services, research and development work on continuous basis is the utmost requirement.

Micro-finance banks, like other financial institutions, must focus on the vital role of human resources in the development and growth through wide-spread marketing of its services to targeted segment of population, both in urban and rural sectors.

The entire human force should be injected with a cultural spirit for helping the poor. As such, apart from providing training in procedures, methodology of lending and collecting deposits, sufficient exposure should be provided to the entire work-force in specialized behavioural skills to deal with disadvantaged groups of communities.

Further, the staff must gear their efforts to encourage community-building so that they may guide their clients in practical matters such as health, education, family planning, disease prevention and treatment, crop production, animal husbandry and children mobilisation to schools.

Unlike conventional banks in Pakistan, micro-finance banks have equal focus on mainstreaming women in economic process. As such staff of these banks should also be gender- sensitised.

In order to attract qualified and dynamic young men and women to this specialised field of banking, there is a management need to inculcate consultative and participatory style of management for creating a sense of belongingness among employees.

This develops automatically when decentralization is the guiding principle and employees’ growth and career progression is taken care of. It is only the sense of belongingness which prompts workers to go out of their way to work for their organization.

Since the clientele of these banks come from poor communities where rate of literacy is very low, it is essential that systems and procedures including documentation process should be very simple and affordable for such clients.

In view of growing interest of youth even from low income group in information technology, the micro finance banks should not only have proper management information system in place for smooth and efficient operations of the bank but also it should be ale to provide computerised record of clients transactions in order to ensure transparency and satisfaction of clients.

The present regulatory framework offered through Micro Finance Banks ordinance 2002 (for banks in private sector) contains some clauses which are either ambiguous in their interpretation or of such a restrictive nature that banks are likely to face constraints while rendering even conventional banking services. In terms of eligibility criteria set by the ordinance one can borrow if his/her income is below the taxable limit. The ambiguity of this criteria is imminent in marginal cases where possibility exist for their upgradation to taxable income level during the tenancy of the existing loans allowed to such customer.

Secondly in the absence of a national level data base on individual’s income it is very difficult to ascertain the income of an individual.

The said ordinance also states that micro finance banks will not be the part of the State Bank of Pakistan’s clearing system. This would hamper smooth and efficient offering of even basic services like deposit-taking and transfer of funds etc.

Their dependency on conventional banks for availing this service would not only enhance their operational cost, but also facilitate invasion of culture of conventional banks directly and indirectly. It would be appropriate if these problems are looked into by State Bank of Pakistan at this initial stage to ensure smooth functioning of these banks.