Pakistan’s microfinance sector is gradually transitioning from conventional operations to Islamic banking modes in line with constitutional directives. The shift covers both microfinance banks and institutions, with several already adopting Sharia-compliant products while others are in the process of restructuring.
This was confirmed by Muhammad Amir Khan, Chairman of the Pakistan Microfinance Network and CEO of HBL Microfinance Bank, during a press briefing ahead of the Pakistan Microfinance Network & UNIDO 9th Annual Microfinance Conference. He noted that all institutions have hired Sharia scholars and experts to ensure proper compliance as they move away from interest-based practices.
The upcoming conference will highlight key themes including agriculture and rural finance, women’s financial inclusion, climate risk adaptation, SME growth, fintech collaborations, and inclusive insurance. Khan stressed that embracing innovation and partnerships will make microfinance a catalyst for social justice, economic transformation, and sustainable development.
Meanwhile, PMN CEO Syed Mohsin revealed that the sector has set a target of reaching 40 million customers nationwide, particularly focusing on women and farmers in rural areas. He added that under a World Bank $125 million support program, microfinance institutions are enhancing liquidity and customer services despite challenges such as flood-related damage in rural regions.
This transition marks a significant milestone for Pakistan’s financial sector as microfinance institutions align with Islamic principles while expanding outreach and promoting financial empowerment.