all of pakistan. the sheer diversity of the stakeholders, many of which had not worked in businesses together, underlines the need for continued close coordination to foster a marketdriven mobile banking eco - system. i must acknowledge the important role our partner donors continue to play in facilitating this sector to develop a sound footing. i would like to especially thank the ukaid and asian development bank for funding support for microfinance development. under the programs sponsored by these donors, a number of market interventions are managed by sbp. some of these initiatives are as follows : the institutional strengthening fund ( isf ) a uk £10million grant facility launched in december 2008, is intended to strengthen institutional & human resource capacity of mfb / is to enhance scale and sustainability of microfinance services. the isf has thus far approved rs. 522 million for 11 microfinance providers including top and middle tier mfbs and mfis. under the arrangements, the isf will support 15 projects for investment in hr, it, product development, risk management systems, business plans and branchless banking development. also, under isf, the pakistan microfinance network ( pmn ) was provided funding support to conduct research and develop the industry ’ s infrastructure such as the testing of pilot microfinance credit information bureau ( cib ) in lahore. going forward, isf will consider how to further support important systemic areas such as upgrading cib to the national level. the microfinance credit guarantee facility ( mcgf ) a £10 million guarantee facility, was launched by sbp in december 2008, to mobilize wholesale commercial funding for microfinance providers through partial guarantees to commercial banks. the facility hasthus far mobilized commercial funding of rs. 3, 225 / - million for four microfinance providers for onward lending to around 200, 000 new micro borrowers. going forward, the facility will aim to raise commercial debt from non bank sources, diversifying sources of commercial capital for microfinance providers. the facility will be instrumental in mainstreaming microfinance providers and resolve some of its funding constraints on a permanent basis. similarly, the financial innovation challenge fund ( ficf ), a £10million innovation grant facility, was launched by sbp in may 2011, to provide grants to foster innovation and test new markets, lower cost of delivery, enable systems and procedures to be more efficient and provide new ways of meeting the larger demand for financial services. the first ficf challenge

. the evolution or trajectory of microfinance has so far remained positive despite the fact that many challenges arose along the way which i will cover later. presently, nine mfbs are operating in pakistan. all these mfbs are privately owned and reflect diversity of ownership and approaches to microfinance banking. considering that the market has potential and the regulatory framework is supportive, the ownership in mfbs has flowed both from local and international investors including banks, development agencies, investment funds, mobile network operators, and large domestic mfis. one of the success stories in microfinance sector is the unique opportunity in pakistan to utilize alternative delivery channels due to the presence of a sound and pro - growth regulatory framework, dense population, and high demand for financial services. the motivation for developing alternative channels for service delivery is twofold : firstly, there is enormous scope for expanding outreach, especially to hard - to - reach rural areas. the emerging models relying on “ banking agents ” will greatly extend the distribution of financial services to the poor and marginalized segments. secondly, alternative delivery channels promise significant cost reduction to institutions. the traditional microfinance business is based on personal, one - on - one relationships. thus, personnel expenses often account for a bis central bankers ’ speeches significant portion of microfinance operating expenses. the use of banking agents will help to reduce the operating costs of the sector. the recent development in mobile phone banking is highly encouraging. the expansion in the retail network of microfinance has arisen overwhelmingly from agents and mobile phone channels. within a span of just two years, there are now almost 18, 000 branchless banking outlets surpassing the 10, 000 conventional bank branches. the combined daily transaction volume of the two prominent branchless banking models “ easypaisa ” and “ omni ” now averages over 175, 000, with an average size of rs. 3, 700. as per an independent world bank – cgap study, the small size of the transaction indicates enhanced access to finance by the poor and the marginalized unbanked people, an important milestone for financial inclusion. the early successes of mobile banking in pakistan are attributable to the collaborative efforts of a wide range of stakeholders, including the government, regulatory authorities, development agencies, nadra, telecom operators, financial institutions, and technology firms. sbp continues to work with all stakeholders, in order to support this nascent industry that is expected to be a key driver in expanding financial services to