‘The unbanked’

Watch part two

In contrast to the global financial crash, one area of banking seems to be thriving. Microfinance institutions are continuing to grow based on their record for low risk and solid returns.

But at the same time, there are now 2.1 billion people in the world who are “unbanked”.

So, how can microfinance provide a foundation for reviving the world’s financial systems?

Microfinance gives small-scale financial services such as loans, savings, insurance, and money transfers to poor customers who would otherwise not have access to banking services.

Microcredit – an important component of microfinance – involves offering very small loans to poor clients without any collateral, and often without any written contract.

Because it falls outside the mainstream economy, it is resilient to global market movements.

But it is not all good news. Established barriers exclude low-income consumers, and financial services are not open to the world’s poorest – making it extremely difficult for them to be lifted out of poverty. 

On Wednesday Riz speaks with Princess Máxima of the Netherlands. In 2006, after a successful career in the banking world, Princess Máxima joined the UN Advisory Group on Inclusive Financial Sectors which was tasked with following up on the results of the year of microcredit.

Also, Riz speaks with Roshaneh Zafar, the founder and managing director of the KASHF foundation, which has grown from just 15 female clients in 1996 to 82,000 clients today.

It is one of the fastest growing microfinance institutions in Pakistan and the first one to achieve financial self-sufficiency.

This episode of the Riz Khan show aired on Wednesday, December 24.