Kashf MFI Project The project aims to help expand microfinance outreach in Pakistan through an investment and technical assistance package for Kashf Foundation (Kashf or the company), one of the largest and best performing microfinance institutions in Pakistan. IFC will provide Kashf with total investment of up to $22.5 million equivalent through two separate entities:  - $15 million loan/guarantee to Kashf Foundation, to help scale up its group lending product to reach half a million women clients within five years, and  - $2.5 million equity investment for a stake of up to 19%, and a standby loan of $5 million in the greenfield Kashf Microfinance Bank (KMB) that is being carved out of the Foundation by transforming its individual loan portfolio.   Kashf Microfinance Bank (KMB) is a greenfield microfinance bank to be established and regulated by the State Bank of Pakistan.  Together, the equity and loan will help finance the establishment and portfolio growth of KMB, which aims to reach significant scale quickly by offering savings and deposit products, individual loans and other value-added services primarily to micro and small business owners, especially women.  Within 5 years, KMB expects a loan portfolio of above $270 million equivalent to approximately 375,000 borrowers and over 1 million savers. IFCs participation is expected to have a positive impact on the countrys economic development as both Kashf and KMB will provide financial services (including savings via KMB) primarily to women and small enterprises, which form a large, under-served, yet productive segment of the local economy. Greater access to financial services by populations currently excluded from the formal banking sector will help reduce poverty and expand economic opportunity for low-income populations throughout Pakistan, especially women.    Through provision of a loan to Kashf, IFC would help finance Kashf increased outreach and portfolio growth.  If a guarantee is used, this would also improve the ability of Kashf to source local funds in the future which will reduce foreign exchange risk and borrowing costs.    By assisting in the establishment of a for-profit, national and fully-regulated microfinance bank, IFC would help demonstrate the profitability and sustainability of large-scale financial services to potential new or currently-limited microfinance providers. This is particularly important to encourage new entrants and greater overall penetration given the large unmet demand for financial services for the poor in Pakistan.    Through Kashf and KMB the project will contribute to the expansion of financial services to low income entrepreneurs and wage earners. By 2010 Kashf alone will have an outstanding loan balance of $480 million equivalent and over 1 million borrowers, the vast majority of which are expected to be women. Combined outreach of the two entities is expected to be reach 1.3 million borrowers and a portfolio of over $750 million. Importantly, KMB will be licensed to mobilize savings and expects to attract over 1 million new deposit clients, thus providing low-income populations with greater financial options, revenue-generating opportunities and safe-keeping for their assets. Overall, improved access to financial services should reduce income disparities and create additional jobs.