most notable has been • rise in private sector credit from rs18 billion in fy00 to over rs 400 billion in fy06 • smes accounted for 17. 4 % of the total outstanding advances by december 2006 • consumer credit accounted for 12 % of the total outstanding advances by december 2006 from virtually negligible levels • rise in agriculture credit from under rs40 billion in fy00 to rs 168 billion in fy07 • housing loans rose from negligible levels to rs70 billion by december 2006 • microfinance loans increased from about rs3 billion in 2003 to over rs. 10 billion by december 2006 • aggregate number of borrowers has risen from 2. 7 million borrowers in 2003 to about 5. 5 million by december 2006. also, now banks are extending their business focus from corporate to household sector. about half of the borrowers have tapped consumer financing which is changing lives of low and middle income households that can now access credit ( table 1 ). table 1. distribution of sector lending 31 - 12 - 2003 sectors corporate smes agriculture consumer finance mortgage loans others microfinance loans total number of borrowers 17, 743 91, 663 1, 411, 508 721, 201 na 135, 561 315, 000 2, 692, 676 amount in million rs. 606, 500 215, 009 104, 676 61, 437 4, 114 169, 035 3, 150 1, 163, 922 31 - 12 - 2006 number of borrowers 25, 740 168, 233 1, 480, 214 2, 665, 423 24, 313 122, 190 997, 778 5, 483, 891 amount in million rs. 1, 269, 564 417, 873 141, 856 276, 037 49, 134 246, 289 10, 743 2, 411, 496 % growth over dec 03 - dec 06 borrowers amount 1, 094 na : not available source : sbp except microfinance numbers are from pakistan microfinance network c. nature and intensity of financial exclusion despite the progress highlighted above, financial penetration in pakistan is quite low. pakistan has the highest number of people per bank branch among regional countries except bangladesh ( table 2 ). table 2. regional comparison : bank's branch penetration number of people per branch country bangladesh 22, 348 india 15, 864 indonesia 11, 845 malaysia 10, 208 pakistan 20,

, 000 ; and ( iv ) the ngos and the cooperatives – later are now mostly closed except for one principal operator, the punjab cooperative bank that has managed to be proactive but it relies on sbp credit lines ( quite an unsustainable approach ) and provincial government support and has to be eventually restructure to be more financial viable. national bank of pakistan. expanding microfinance outreach in pakistan, www. sbp. org. pk / about / speech / governors / dr. shamshad / 2007 / mf - pm - 17 - apr - 07. pdf. commercial banks have selectively provided liquidity support to few mfis. in the last six years, mf industry and beneficiaries have grown ( table 4 ). currently the network of mf providers is 239 branches servicing about 1. 1 million clients with about rs5. 6 billion portfolio. among mf providers, khushali bank alone accounts for 47 % of this network. however, mfloan portfolio is higher close to rs73 billion ( as of december 2006 ) if one adds to mf providers programs all the agriculture, national bank of pakistan and other banks ’ small and micro lending. table 4. growth in microfinance ( numbers in thousand ) year borrowers savers 2007 up to march source : pakistan microfinance network even though industry has grown and is quite vibrant, its limited scale ( both in terms of beneficiaries and region ) and impact has recently necessitated stock taking of where we stand and how to transform this sector to meet more aggressively and swiftly country wide requirements. the mf - strategy advocates enhancing scale of mf operations to serve 3 million within 3 years for it to be henceforth extended eventually to 10 million expeditiously. mf ought to provide multiple services and products and sector financing and should include support for the un - banked poor but also those above it. the strategy aims to encourage a change in vision and mission of mf operators from being charitable and social service providers to sustainable financial service providers. to achieve scale, the strategy underscores that all mf business need to position themselves for scalability and sustainability by augmenting their reach and developing alliances with other players, provision of wide ranging financial services and nurturing both financial and social sustainability. in addition, the strategy aims to unleash the potential of existing mf providers, while enhancing competition by allowing entry of new international players