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Volume I, Issue II (2017) pp. 40-53

40

A COMPARISON RATIO ANALYSIS BETWEEN MICROFINANCE

BANKS, MICROFINANCE INSTITUTIONS AND RURAL SUPPORT

PROGRAMS IN CREATING SELF-EMPLOYMENT IN PAKISTAN

ISSN: 2521-022X

Hassan Ali1 (Corresponding author)

[email protected]

MS Scholar, Capital University of Science and

Technology, Islamabad.

Dr. Ayaz ul Haq2

[email protected]

Assistant Professor, University of Central

Punjab, Rawalpindi Campus

Rameez Nasir3

[email protected]

M.Com, University of Central Punjab,

Rawalpindi Campus

Abstract

The aim of this research is to make comparison between microfinance banks, microfinance

institutions and rural support programs in creating self-employment in Pakistan. This has been

done by reviewing the literature of national and international level that researchers have viewed

to suggest that microfinancing is a tool to reduce the poverty level. The data has been extracted

from the years 2011-2014. In this time period, each of the four financial banks or institutions

has been acting as microfinance banks, microfinance institutions and rural support programs.

Various ratios have been applied on the data collected from each microfinance bank,

microfinance institution and rural support programs. Their productivity, rate, frequency,

feasibility and criteria of lending loans, and profitability trend in each sector have also been

analyzed. This study concludes that after applying all the ratios, analyzing its return and seeing

the efficiency that Rural Support programs are making the economy stronger than the

microfinance banks and microfinance institutions, as their major focus is to make the country

prosperous by lending the loan to the people. Such a grant consumes lesser days to grant loans

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SCIMASS (Scientific Journal of Management and Social Sciences) Volume I, Issue II (2017)

41

and maximum number of people borrows from this Rural Support program that promotes self-

employment in Pakistan.

Keywords: microfinance, banks, institutions, rural support program, self-employment

Introduction

As the title suggests, the microfinance banks are the monetary institutions which lend

small portions of loans and other similar monetary services to the poor people. As per the State

Bank of Pakistan, the minimum capital that is required for this service is Rs. 1000 million.

Moreover, if initiating bank is microfinance then the stipulation of establishing it requires it to

first perform its services as a microfinance institution for minimum three years and then convert

itself into a microfinance bank as per the law stated in section 13 of the Microfinance Institution

Ordinance 2001.

These microfinance banks were first initiated by Grameen in Bangladesh in 1984; the

first Microfinance bank ever in this world. This microfinance served as a tool for the poverty

reduction and creating self-employment. It set the benchmark and admired the sectors of public

and private institutions to follow their lead. During 1990s, the imperative of this microfinance

has been considered as most imperative tool at international level. Moreover, International

Financial institution (IFIs) initiates giving funds for improvement of Microfinance sector. In

current scenario, prosperity of microfinance sector has been the main muscle in poverty

reduction and it is the core strategy of developing countries.

The poor people of Pakistan ordinarily depend upon these sources for accomplishing

most of their credit needs. These servers serve to help the lower income group. They target

those who are not able to establish their own business; “un-bankable” due to the reason that

they are not in a significant state to approach commercial banks and get loan from them. There

are multiple providers of funds including friends and family, landlords, moneylenders etc. who

lend the money to the poor around them on varying terms. It has been experienced in Sindh

and Southern Punjab that landlords lend credit to their tenants for the acquiring of agriculture

materials (Hussain, 2009).

Agriculture Census of 2010 concluded that 65% of debts that are outstanding of overall

rural households were provided by these microfinance institutions, microfinance banks and

rural support programs. In Pakistan, microfinance institutions as well as microfinance banks

are performing services effectively and efficiently; but due to the procedural activities, the


42

process lacks smoothness to approach common civilians, to Pakistanis in our case. The

microfinance Institutions mostly target the middle and the lower middle classes.

Rural Support Programs were designed and launched in Pakistan during the period of

1980s when the first RSP the Agha Khan Rural Support Program (AKRSP) was established in

Northern Areas of Pakistan. In the passing years, the RSP model is purely community

organization and is mobilization-oriented all over the country.

Microfinance banks, Microfinance institutions and Rural Support Programs are getting

well-known day by day. Many researchers have already been debating and giving their verdict

regarding similarities and differences between these institutions. But there is still a hollow

space left which must be identified and filled; because in Pakistan, the potential market for

Microfinance is generally being noticed to be about 7 to 8 million households, which is almost

one third of altogether household in the country. A slight consideration is about the

methodology to see this market share can get noticed through the experts in this sector. They

have already explained that the potential market is usually the population below the poverty

line.

All the institutions originated in Punjab and almost all their operations are treated in

this province. At the end of December 2008, these MFIs market shared 28% of active

borrowers. It is an amazing strategy of not charging any kind of interest against lending but

raising funds through alternative source that is someone’s contribution known as philanthropic

contribution.

Due to being diverse in nature, the microfinance services served by most Rural Support

Programs are limited to one or two basic credit tools. RSPs had also collected funds from their

members but as these have the non-bank status so they are not to be allowed to take deposits;

they put all the deposits in commercial banks in the name of the community organizations

(Hussain, 2009).

The objective of this study is about the microfinance being a substitute for informal

credit. To identify all the ways from the microfinance banks, microfinance institutions and rural

support programs to help reducing poverty, improve the living standard of the people who are

below the poverty line and enhancing the economic growth. The study will analyze and have a

comparison between the microfinance banks, microfinance institutions and rural support

programs in making people of Pakistan, especially poor people self-sufficient and self-

employed.


43

The project is giving ample and imperative information regarding the sector of

microfinance banks, microfinance institutions and rural support programs that will foster not

only the researcher but also the readers in finding the significance of microcredit financing i.e.

reducing poverty and accurately mobilizing funds. By comparing the microfinance banks,

microfinance institutions and rural support programs, it gains the benefit for (i) the Investors

who want to invest in the Pakistan and to find where investment is properly functioning, (ii)

government which wants to know which microfinance field to be chosen to develop the country

at what time, (iii) policy makers can in making prosperous policy, (iv) teachers and students in

knowing the best way of funding mobilization and sources as well and so on. The researchers

have made sure in the project that it will notify the weak connections of people living in or

under the poverty line of Pakistan and suggesting the measures to improve the life style, and

standards of living in long term. The study will also be significant in enhancement the economy

and documenting prosperity in the sector of economy after providing microcredit facility.

Literature Review

Ninety percent of people in developing countries lack financial institutions and services

either of lending or for the saving purpose. Especially for those poor who lack assets, this

makes the situation worse and curtails their economic situation which also hampers the poor

people to manage (Robinson, 2002).

Microfinance is the best way to cut down the poverty, increase the economic growth

and make development in the economy. Asian Development Bank (ADB) states microfinance

serves a broad range of financial services like deposits, lending loans, payment services,

transfers of money, and making insurance to poor people (ADB, 2000). Role of microfinance

banks is to have promotion and prosperity of entrepreneurship in semi urban and rural areas.

Central Bank of Nigeria (CBN) identifies microfinance as a tool to reduce poverty through

promoting self-employment. Central Bank of Nigeria is financially service oriented to those

people who are unable to reach the financial institutions (Muktar, 2009).

In the past two decades microfinance has become an imperative tool for the progress of

the economy, especially for loans provided to the women because women are empowered and

are mature enough for having a creative and productive role. This makes a gate way for them

to pass a freedom line for themselves.

Working with an efficient employer does not make it obvious that now you have to be

the same as your employer. For self-employment, one has to find way not be dependent, and

ensure that they are controlling and managing the income they are generating from trade or


44

business. All around the world, nations like United States and United Kingdom are focusing

more on self-employment (Awan, 2010).

In the form of small size financial executions to people who are not controllable, such

services from financial institutions plead that Microfinance (MF) is the security of financial

services. Initialization of Graeme in Bangladesh in 1984, the first Microfinance bank ever in

the world, reduction of poverty is no longer a mere dream because this microfinance bank has

been identified as an imperative gadget for the reduction of poverty. It serves the poor people

who are in need of finance so that they can be self-sufficient. This bank shows the path to the

public and private financial institutions not only in Bangladesh but in other countries as well.

At the International platform, the importance of Microfinance is recognized more noticeable.

International Financial Institutions (IFI’s) initiate its funding towards the development of

Microfinance sector. In present situation progression of Microfinance sector is one of the strong

pillars in the world to reduce the poverty in developing countries (Awan et al, 2015).

Pakistan is the developing country and the concept of Microfinance is progressing

slowly but the impact of it has made tremendous progress in this field. Government has also

made effort for its prosperity under the ordinance 2001. There are multiple Microfinance

Institutions working in Pakistan like National Rural Support Program (NRSP), Wasila Bank,

Microfinance Tameer Bank and many more. In present situation, PM youth loan scheme makes

self-employment increase in Pakistan (Awan and Hashmi, 2014).

People who are living in developing countries usually face the issue of low income.

This problem needs to be addressed. In developing countries like Bangladesh, microfinance

can be used as an important tool for the accelerating living standard of poor people (Akram et

al, 2011).

Majority of microfinance institutions charge their high rates of interest as high as

approximately 36% but ignoring this factor, still microfinance institutions are famous. It is just

because of the functioning which is easier, quicker, lacks the essential of collateral, and

provides foster in technicality.

Microfinance Institutions are helpful in the creation of people economy more

efficiently. They make people self-employed in the country, not only focusing on men but it

plays a key role in the development of women in the society by providing them loans. The

query arises that why is it focusing on women as well? Answer is that the women in the

developing countries are not supported to take charge and not given opportunities. So, these


45

microfinance institutions make it considerable and has better clients for micro lending because

they use it for those who are more essential (Woodworth, 1997).

Comparisons between the developed countries and developing ones is that developed

countries are those which can enjoy a high standard living like the people who save the week

to buy their meal, over the six-month savings they can pay for the apartment rent, but contrarily,

developing countries’ reality is that mostly people live hand to mouth. Statistics show that 1.4

billion people on the globe are facing the same scenario. This poverty needs to be vanished

from the developing countries by the microfinancing.

Methodology

The population of the research is twenty-seven that the researchers have taken in their

research. The sample of the research is twelve of the population. The criteria of taking sampling

data are randomly. In the research, there are two types of data to be taken about who has capital

in large and two types of data to be taken about who has capital in small from each

Microfinance Banks, Microfinance Institutions and Rural Support Programs.

The Published data (Secondary Data) of four years has been used for research and all

the data has been collected from microfinance banks, microfinance institutions and rural

support programs. Sampling is random plus convenient that is easily available to get the data.

Results and Discussion

First Microfinance Bank

Name Years Gross

profit

Net

profit

Current

Assets

Total

equity

Total

Asset

Current

liabilities

Total

Liabilities

ROA ROE

Current

Ratio

Loans

and

Advances

Expenditure

First

Microfinance

Bank

2011 100584 832614 4335604 1996622 5285508 3097636 1464773 0.15 0.41 13.99 847507 668317

2012 212193 1659175 1045066 986810 1289618 33628784 6864828 1.28 1.68 3.11 146509 127328

2013 143099 911723 489102 1108632 9514042 294387 8,405,410 0.09 0.44 1.66 3450418 839158

2014 109411 1065389 752840 1237139 1067473 397810 9,437,591 0.99 0.86 1.89 4416691 979539

If we interpret the data analysis of First microfinance bank that has the net profit from

2011-2014, we see that there is are fluctuations in these years i.e. have the upward and

downward trend but ultimately have the upward trend in net profit. The reason is reduction in

the cost of goods which its interest as low as 10%. As far as ROA is concerned, it shows a

positive trend that depicts profit and has more effectively managed its assets to produce slow

rate amount of net income. Rest of ROE shows the data of first microfinance bank which


46

reveals that its trend is growing in a slow manner i.e. shareholders are seeing their investment

in return effectively and efficiently. So according to this data trend, ROE rate is generating

profits of shareholder in a slow manner.

Khushali Microfinance Bank Ltd

Name years

Gross

profit

Net

profit

Current

Assets

Total

equity

Total

Asset

Current

liabilities

Total

Liabilities ROA ROE

Current

Ratio

Loans and

Advances Expenditure

Khusha

li Bank

ltd.

2011 1022533 1515642 1350686 2365779 8221480 2210622 5855700 0.18 0.64 2.37 416411 112892

2012 1145906 1679411 10149817 2489028 9,953,616 4,141,051 7,464,588 0.17 0.67 1.62 571703 132671

2013 363198 1662924 11189988 2758877 1328965 6517529 1053077 1.25 0.60 1.02 875689 153974

2014 703211 2319932 10238275 3286127 1669243 9939564 1340630 1.39 0.71 0.72 121058 191453

To interpret the data analysis of Khushali microfinance bank that has the net profit from

2011-2014, the researcher would assert that there is a rapid increase and an upward trend in net

profit these years. The reason is reduction the cost of goods which makes low rate of interest

(10%) and expenses possible. As far as ROA is concerned, it shows positive trend that depicts

profit and has more effectively managed its assets to produce slow rate amount of net income.

The rest of ROE data of Khushali microfinance bank shows that its trend is growing in a swift

manner which means shareholders are seeing their investment in return effectively and

efficiently. So according to this data trend of ROE rate is generating profits for shareholder in

a good manner.

NRSP Microfinance Bank ltd.

Name Years Gross

profit

Net

profit

Current

Assets

Total

equity

Total

Assets

Current

liabilities

Total

liabilities ROA ROE

Current

Ratio

Loans

and

Advances

Expentures

NRSP

Bank

ltd.

2011 2173322 3554277 12726242 9005173 4099292 1195427 3198775 0.87 0.39 1.69 206808 353788

2012 4460536 1667332 4855260 1267253 6333513 1713795 5066260 0.24 1.32 1.37 302105 526715

2013 7842352 2442488 6306426 1450250 9804015 2778010 8353765 0.25 1.68 0.99 479035 757018

2014 9763142 3645129 8679525 1670464 11209468 2980650 1025645 0.26 1.95 0.98 586103 988542

To interpret the data analysis of NRSP microfinance bank that has the net profit from

2011-2014, there is a rapid increase in these years and have the upward trend in net profit. The

reason is that reduction in the cost of goods also makes it possible that it has low rate of interest

that is 10%. The expenses are in a high rate and the reason is that sales ratio or selling price is

high. As far as ROA is concerned, it shows positive trend that depicts profit and has more

effectively managed its assets to produce slow rate amount of net income, rest ROE shows in

the data of NRSP microfinance bank that its trend is growing in a swift manner that is


47

shareholders who are seeing their investment in return effectively and efficiently. So, according

to this data, trend of ROE rate is generating profits of shareholder in a good manner.

Tameer Microfinance Bank

Name years Gross

profit

Net

profit

Current

Assets

Total

equity

Total

Asset

Current

liabilities

Total

Liabilities ROA ROE

Current

Ratio

Loans

and

Advances

Expenditure

Tameer

microfinance

Bank

2011 831128 134470 870159 1458224 8281106 4191007 6805261 0.02 0.0998 0.17 5054297 1030425

2012 1177792 374110 1048435 1832334 1334816 767989 1150308 0.28 0.2041 0.12 6687865 1371237

2013 1483964 381755 1131244 2194431 1519069 862691 1298127 0.17 0.1739 0.09 8311128 1761344

2014 2288584 708493 1030330 2821912 1639329 1048807 1354937 0.043 0.251 0.08 8941759 2446748

To interpret the data analysis of Tameer microfinance bank that has the net profit from

2011-2014, there is a rapid increase in these years and have the upward trend in net profit. The

reason is that reduction in the cost of goods also makes it possible that it has low rate of interest

that is 10%. The expenses are in a high rate and the reason is that sales ratio or selling price is

high. As far as ROA is concerned, it shows decreasing trend that depicts profit and has less


the data of Tameer microfinance bank that its trend is growing in a swift manner that is

shareholders who are seeing their investment in return effectively and efficiently. So, according

to this data, trend of ROE rate is generating profits of shareholder in a good manner.

Akhuwat Microfinance Institution

Name Years Gross

profit

Net

profit

Total

Asset

Total

equity

Current

Assets

Current

liabilities Expenditure ROA ROE

Current

Ratio

Loans and

Advances

Akhuwat

Microfinance

Institution

2011 2225991 3170041 3231794 5492314 2599635 5725184 2225991 1.18 0.55 0.45 5595544

2012 2436372 4512937 1471618 1266314 1332985 1467521 2436372 1.177 0.38 0.91 1000376

2013 2454666 2781636 2781636 63804973 2538196 3854742 2454666 0.58 0.25 0.66 2265542

2014 255795 9691314 9691314 33147103 9033080 47601740 1672633 0.68 1.98 1.89 2867367

To interpret the data analysis of Akhuwat microfinance institution that has the net profit

from 2011-2014, there is a rapid increase in these years and have the upward trend in net profit.

The reason is that reduction in the cost of goods also makes it possible that it has low rate of

interest that is 15%. The expenses are in a high rate, reason is that sales ratio or selling price is

high. As far as ROA is concerned, it shows decreasing trend that depicts profit and has less


the data of Akhuwat microfinance institution that its trend is growing in a deviating manner

that is shareholders who are seeing their investment in return effectively and efficiently. So,


48

according to this data, trend of ROE rate is generating profits of shareholder in a significant

manner.

Deep foundation Microfinance Institution

Name Years Gross

profit/loss

Net

profit

Total

Asset

Total

equity

Current

Assets

Current


Current

Ratio

Loans and

Advances

Deep

Foundation

2011 -232094 512806 934759 512806 934759 482701 456493 0.55 1 1.94 13211

2012 -526644 1586095 1586095 -758738 1368629 417533 893111 1 -2.09 3.28 14143

2013 -1244199 1356621 1356621 -2002937 1107109 688458 3911614 1 -0.68 1.61 11629

2014 -1410783 1186479 1273229 -2560710 1017629 645270 3802517 1 -0.46 1.58 10625

To interpret the data analysis of Deep foundation microfinance institution that has the

net profit from 2011-2014, there is a decrease in these years and the downward trend in net

profit. The reason is that increasing the cost of goods also makes it possible to keep the

expenses on a high rate, reason is that sales ratio or selling price is high. As far as ROA is

concerned, it shows standardized trend that depicts profit and has effectively managed its assets

to produce adequate rate amount of net income. Rest ROE shows, in the data of Deep

foundation microfinance institution, that its trend is decreasing i.e. showing ratio in negative.

So, according to this data, trend of ROE rate is not generating profits of shareholder in a

significant manner.

Kashf Foundation Microfinance Institution

Name Years Gross

profit/loss

Net

profit

Total

Asset

Total

equity

Current

Assets

Current


Current

Ratio

Loans

and

Advances

Kashf

Foundation

2011 -3919071 -385356 2986129 -2176392 2305561 2798924 12052807 -1.29 0.18 0.82 5822148

2012 34445120 3546955 3834470 -1632684 3261173 2731042 6185158 0.93 -2.17 1.19 7001515

2013 1117026 1124746 4580527 -3060448 3863115 1896162 13503221 2.46 -3.68 2.04 4927530

2014 2983239 5311216 5311216 28243465 45879268 3229152 8392431 1 0.19 1.42 5894714

To interpret the data analysis of Kashf Foundation microfinance institution that has the

net profit from 2011-2014, it starts with a decreasing trend in these years and gradually having

upward trend in net profit. The reason is increase in the cost of goods from the starting years.

But after this, it would be coming down while making it possible that the expenses are

fluctuating and not static. The reason is that sales ratio or selling price is in both the directions

i.e. low as well as high. As far as ROA is concerned, it starts from negative and approaches to


49

standardized trend which depicts profit and has effectively managed its assets to produce

adequate rate amount of net income, rest ROE is showing in the data of Kashf Foundation

microfinance institution that its trend is decreasing i.e. showing ratio in negative which is

depicting that the shareholders who are seeing their investment in return are not effective and

efficient. So, according to this data trend of ROE rate is not generating profits of shareholder

in a significant manner.

Naymet Trust Microfinance Institution

Name years Gross

profit/loss

Net

profit

Total

Asset

Total

equity

Current

Assets

Current


Current

Ratio

Loans

and

Advances

Naymet

Trust

2011 3428048 7934442 7934442 7771109 7469272 163333 1039965 1 1.02 45.73 1564170

2012 957267 1074042 10740429 9253721 993262 1486708 1337634 1 1.16 6.68 4350000

2013 618825 107069 10706940 9693537 922478 1013403 7578989 1 1.11 0.91 4131700

2014 104535 10295498 10295498 9675945 952925 619553 1372559 1 1.06 15.38 4574257

To interpret the data analysis of Naymet Trust microfinance institution that has the net

profit from 2011-2014, there is an increase in these years and have the upward trend in net

profit. The reason is that decreasing the cost of goods also makes it possible for the expenses

to go from high to finally low rates. The reason is that sales ratio or selling price is high. As far

as ROA is concerned, it shows standardized trend that depicts profit and has effectively

managed its assets to produce adequate rate amount of net income, rest ROE shows in the data

of Naymet Trust microfinance institution that its trend is getting better i.e. showing ratio

positively which means that shareholders who are seeing their investment in return are more

effective and efficient. So, according to this data, trend of ROE rate is significantly generating

profits of shareholder in an adequate manner.

Agha Khan Rural Support Program

Name years Gross

profit/loss

Net

profit

Total

Asset

Total

equity

Current

Assets

Current


Current

Ratio

Loans

and

Advances

Agha

khan

RSP

2011 893000 797000 8974835 3542869 3791984 1699340 683230 0.89 2.25 2.23 8490000

2012 9460000 827000 1075938 4074836 4543681 2080677 767981 0.77 2.03 2.18 7570000

2013 1220000 104500 1281195 4759795 5213043 2473145 881523 0.82 2.19 2.10 5190000

2014 127000 1079000 1353878 5422877 4944289 2878519 100820 0.79 1.99 1.71 5770000

To interpret the data analysis of Agha Khan Rural Support Program that has the net

profit from 2011-2014, there is a tremendous increase in these years and have the upward trend


50

in net profit. The reason is decrease in the cost of goods but the expenses show high rates. The

reason is that sales ratio or selling price is high. As far as ROA is concerned, it shows a constant

rate that depicts profit and has effectively managed its assets to produce adequate rate amount

of net income, rest ROE shows in the data of Agha Khan rural support program that its trend

is increasing that is showing ratio positively which means that shareholders who are seeing

their investment in return are more effective and efficient. So, according to this data, trend of

ROE rate is significantly generating profits of shareholders in an adequate manner.

National Rural Support Program

Name years Gross

profit/loss

Net

profit

Total

Asset

Total

equity

Current

Assets

Current


Current

Ratio

Loans

and

Advances

National

RSP

2011 2374226 651368 1109842 4000729 7946609 5404010 1041648 0.59 0.162 1.47 102222

2012 2914929 904517 1300102 5011591 7564126 5844650 1160050 0.69 0.18 1.29 121171

2013 3201870 9245228 2376172 2376172 9040594 1154257 9069673 0.04 3.89 7.83 4426525

2014 3228765 9797058 3367780 3367780 1138787 1624948 1281405 0.03 2.91 7 3025056

To interpret the data analysis of National Rural Support Program that has the net profit from

2011-2014, there is a tremendous increase in these years and have the upward trend in net

profit. The reason is the decrease in cost of goods but the expenses show high rates. The reason

is that sales ratio or selling price is high. As far as ROA is concerned, it shows a decreasing

rate that depicts minor profit and has merely effectively managed its assets to produce adequate

rate amount of net income, rest ROE shows in the data of National rural support program that

its trend is increasing i.e. showing its ratio positively which means that shareholders who are

seeing their investment in return are more effective and efficient. So, according to this data

trend of ROE rate is significantly generating profits of shareholder in an adequate manner.

Sarhad Rural Support Program

Name years Gross

profit/loss

Net

profit

Total

Asset

Total

equity

Current

Assets

Current


Current

Ratio

Loans and

Advances

Sarhad

RSP

2011 1955138 5899931 5899931 433067 5865724 1569257 2788768 1 1.36 3.74 103766

2012 -722075 5390473 5390473 360859 5363698 1781874 3574845 1 1.49 3 145798

2013 57614818 6662200 6662200 450694 6662200 2155254 7455783 1 1.48 3.09 216292

2014 -1.4E+07 5076602 5076602 315524 5076602 1921355 1317042 1 1.61 2.64 135297


51

To interpret the data analysis of Sarhad Rural Support Program that has the net profit

from 2011-2014, there is a fluctuation in these years and have the upward and downward trend

in net profit. The reason is decrease in the cost of goods in a nominal manner, but the expenses

show low rates. The reason is that sales ratio or selling price is moderate. As far as ROA is

concerned, it shows a constant standardized rate that depicts more profit and has effectively

managed its assets to produce adequate rate amount of net income, rest ROE shows in the data

of Sarhad rural support program that its trend is increasing i.e. showing its ratio positively

which means that shareholders who are seeing their investment in return are more effective and

efficient. So, according to this data trend of ROE rate is significantly generating profits of

shareholder in an adequate manner.

Thardeep Rural Support Program

Name Years Gross

profit/loss

Net

profit

Total

Asset

Total

equity

Current

Assets

Current


Current

Ratio

Loans

and

Advances

Thardeep

RSP

2011 1028966 1028966 1357695 3939743 1284403 5821182 1350810 0.06 0.261 0.22 3775868

2012 921454 9214544 1331604 4851508 1258227 5236451 1179299 0.69 0.19 0.24 5333566

2013 824727 8247274 1935204 5673844 1859565 8572385 8029552 0.43 0.15 0.216 7709597

2014 1029223 10292237 2005260 6514333 1937645 8387211 9680917 0.51 0.02 0.166 1355655

To interpret the data analysis of Thardeep Rural Support Program that has the net profit

from 2011-2014, there is a tremendous increase in these years and have the upward trend in

net profit. The reason is decrease in the cost of goods, but the expenses show high rates. The

reason is that sales ratio or selling price is high. As far as ROA is concerned, it shows a variation

in rates that depicts profit and has effectively managed its assets to produce adequate rate

amount of net income, rest ROE is showing in the data of Thardeep rural support program that

its trend is diminishing i.e. showing its ratio positively which means that shareholders who are

seeing their investment in return are least effective and efficient. So, according to this data,

trend of ROE rate is significantly generating profits of shareholder in an adequate manner.

Overall data analysis comparison

Name Gross

profit/loss

Net

profit

Total

Asset

Total

equity

Current

Assets

Current


Current

Ratio

Loans and

Advances

MFB 33820955 24554864 82550553 37929055 76198999 75765759 12441149 0.29 0.65 1.01 41415086

MFI 17286478 15656266 78716717 94843644 85579076 74821426 69316161 1.12 0.64 1.10 50044471


52

RSP 72555049 75217898 50498711 55096221 73491177 58604515 50363346 0.043 0.27 1.20 53470813

To interpret the overall data comparison between the microfinance banks, microfinance

institutions and rural support programs, the data is extracted from the years 2011-2014 which

shows that the net profit of rural support program 75217898 is more than the microfinance

bank 24554864 and, in the end, microfinance institution 15656266. The reason is that rural

support programs have a decrease in the cost of goods as compared to the microfinance banks

and microfinance institutions, but the expenditures show that microfinance bank 12441149 has

less than the rural support program 50363346 and microfinance institution 69316161.

As far as ROA is concerned, the microfinance institution 1.12033 has more rate than

the microfinance bank 0.297452 and rural support program 0.043716. The reason is that

microfinance institutions have effectively managed their assets to produce adequate rate

amount of net income. Rest ROE shows that microfinance bank 0.647389 has more rate than

the microfinance institution 0.642519 and rural support program 0.273242. The reason is that

microfinance banks show ratio positively which means that shareholders who are seeing their

investment in return are more effective and efficient. So, according to this data, trend of ROE

rate is significantly generating profits of shareholder in an adequate manner than the

microfinance institutions and rural support programs.

Conclusion

To conclude this research, the researcher comes to this point that considering all the

facts and figures, terms and conditions, rules and regulations of all aspects of microfinance

banks, microfinance institutions and rural support programs, one that can make the economy

of Pakistan boost is Rural Support Programs. The reason behind this conclusion is that its

profitability is more and also customers are more attracted towards it. Moreover, it consumes

lesser working days than the other ones. Its liabilities and expenses are lesser than those of the

others.

References

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53

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