KARACHI: TPL Corporation Ltd said on Tuesday it’s considering the acquisition of majority shares in FINCA Microfinance Bank Ltd (FMBL) jointly with Abhi Ltd.

A holding company with stakes in insurance, real estate and many other sectors of the economy, TPL Corporation Ltd said it’s signed a non-binding term sheet along with Abhi Ltd, a fintech that provides employees with earned wage access.

FMBL is among the smallest players in the microfinance banking industry. According to its financials for January-September 2022, the latest period for which data is available, the micro-lender posted a net loss of Rs729.2 million versus a net loss of Rs1.3 billion in the same period a year ago.

At the beginning of 2023, FMBL announced it was considering merging its operations with Apna Microfinance Bank Ltd, another small micro-lender, to create a “more efficient” single entity. The two micro-lenders had also received conditional approval from the State Bank of Pakistan to start reciprocal due diligence, another name for a comprehensive appraisal of each other’s businesses.

However, there’s been no public disclosures subsequent to the announcement of a possible merger.

The microfinance penetration rate — which shows the share of the relevant population that has used microfinance products at least once in their lifetime — was 23.1 per cent at the end of March 2023 versus 22.7pc a quarter ago. This means more than seven in every 10 potential customers in the country still can’t access microfinance services.

There’re 12 microfinance banks. In addition, 31 non-bank microfinance companies and five rural support programmes also operate in the micro-lending space.

The size of all outstanding loans of the microfinance industry crossed the Rs500 billion mark for the first time in the January-March quarter of 2023. The number of active microfinance borrowers crossed 9.2m, up 1.8pc from the preceding quarter.

Published in Dawn, November 15th, 2023