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MGT411 Money & Banking GDB Solution Spring 2014

Case:

In Pakistan, there are many people who cannot get benefit from financial products (instruments), Because of their low income, unemployment, residence in small villages, less awareness of financial services & financial markets. To facilitate such people, there are “Microfinance banks (MFB’s)”, to serve people who have no mean to gain financial services. The goal of MFB’s is to provide low income and poor people an opportunity to become self-sufficient and secured by efficient means of saving & borrowing money and insurance.

Now a day, many MFB’s are operating to facilitate poor people especially of small villages. On the other hand, the responsibility of their protection lies on the shoulder of government, to develop a system in which investors (especially small investors) should be protected. For this purpose, Government of Pakistan provides complete set of regulations and requirements for microfinance banks. From time to time government keeps on revising them to make them more effective.

Waseela Microfinance Bank Ltd. has been established in Pakistan, with the evolution in technology and branchless banking. It offers mobile banking products including several types of loans, deposit accounts, branchless banking, ATM cards, SMS alerts and E-statement.

 “Mobicash” is the branchless banking product of Waseela Microfinance Bank Ltd. “Mobicash” provides the following services: money transfer, bill payment, mobile account, mobile top-up, Mobicash beema (insurance) and corporate solutions.

Use the following resources:

  • Prudential and Revised Regulations for Microfinance banks.pdf,
  • Waseela MFB Audited Financial Statements December 31 2013.pdf ( along with notes)
  • 3 TV Advertisements
  • Websites: Waseela MFB: http://www.waseelabank.com/ & Mobicash: http://mobicash.com.pk/

Now go to your LMS interface and download a “RAR file: Money & Banking MGT411 GDB 2.rar” that includes the above resources” uploaded there in the “Downloads” tab. Get this file downloaded, thoroughly go through the above mentioned resources and answer the following questions.                                                                                                           (1.25 x 4 marks)

  1. Financial literacy programs

Do you think that Waseela MFB provides proper guidance about their product “Mobicash”, to its users through media channel and website?                                 (Resources Hint: TV Advertisements & Website)

Yes Waseela bank provide proper guidance via Television Advertisement and Website Advertisement. Its objective is to help in improving access to finance, provide exceptional value to our clients and expand economic opportunities for people of Pakistan.

  1. Minimum capital requirements:

Do you think Waseela MFB has maintained the minimum requirement of capital according to its level of operations? Discuss

(Resources Hint: MFB Regulations, TV Advertisements & Audited Financial Statements)

  1. Transparency & disclosures:

Government requires MFB’s to make their working more transparent with maximum disclosures. Do you think that depositors/users of Waseela MFB can judge the financial soundness of a bank from the given disclosures? Discuss

(Resources Hint: Audited Financial Statements)

Waseela Microfinance Bank Limited (WMBL) is the 10th licensed microfinance bank in Pakistan by State Bank of Pakistan under ‘Microfinance Institution Ordinance 2001’ and is 6th bank having nationwide operating mandate. WMBL started its operations on May 2, 2012.

Orascom Telecom Holding S.A.E (“Orascom Telecom”) is the major sponsor of the Bank and is the owner of Pakistan largest mobile phone operator (Mobilink) having more than 35 million subscribers all over Pakistan.

WMBL is uniquely positioned to leverage the new SBP policies and directions to create a game changing business model that would have a transformational impact on the financial services sector in Pakistan. The combination of a WMBL with Mobilink, having largest established nationwide retail distribution muscle, would go a long way in filling the gap in the market identified by the SBP.

WMBL will capitalize on the distribution network of Orascom Telecom’s mobile operations in Pakistan, by making use of its database and relationship with over 35 million customers in Pakistan, as telecom access will be used as the focal point to effectively allow customers to use financial services.

WE serve low income wage earners and self-employed micro- business owners in rural and urban parts of the country with the support of a strong and competent management team. In addition, women entrepreneurs and small scale farmers will be provided with micro loans at competitive rates to increase their quality of life.

WMBL endeavor to provide conducive branchless banking to its low end and untapped market segment and is using Mobilink as a super-agent for branchless banking. With the vast agent network of Mobilink and clearly defined structure of its agents, the branchless banking initiative seems to be promising one and is forecasted to perform well by bringing banking to the doorstep of customers and increasing customer convenience to access his funds in a more efficient and secured way.

  1. Reserve and Liquidity:

In 2013, Waseela MFB incurred loss. For small villagers (depositors/ users), it is very difficult to measure its riskiness of operations. Do you think Waseela Bank is running/ facing liquidity risk?

(Resources Hint: MFB Regulations & Financial Statements)

(Support your answer with logical reasoning)  

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