Parwaaz Financial Services Ltd (“PFSL” or “the Company” was incorporated on December 23rd, 2020 under the Companies Act 2017. The company obtained the license to carry out Investment Finance Services as a NonBanking Finance Company under the Non-Banking Finance Companies (Establishment and Regulation) Rules 2003 (NBFC Rules) and Non-Banking Finance Companies and Notied Entities Regulations, 2008 (the NBFC Regulations) on June 22nd, 2021..

Parwaaz Financial Services Limited (PFSL) was established by Karandaaz Pakistan, a not-for-profit company sponsored by international development partners including the Bill & Melinda Gates Foundation and the UK’s Foreign, Commonwealth & Development Office (FCDO). PFSL operates as a non-banking financial company (NBFC) with a primary mandate to provide tailored financial solutions to Small and Medium Enterprises (SMEs), a segment recognized as critical to Pakistan’s economic development. Leveraging a proprietary digital lending platform, PFSL aims to deliver quick, accessible, and user-friendly financial services, thereby improving customer experience, operational efficiency, and outreach within its target market.

Parwaaz Financial Services Limited (PFSL) commenced operations in 2022 as a licensed NBFC with a mandate to extend both short-term and long-term financing to the SME sector. The company’s lending activities are diversified across multiple segments, agriculture value chain, manufacturing, healthcare, education, and renewable energy, reflecting management’s strategy to balance growth opportunities with sectoral risk exposure. In addition to its proprietary portfolio, PFSL acts as an agent for Karandaaz Pakistan, originating and managing SME financing programs on behalf of its parent organization, which enhances business volumes while limiting direct credit risk on certain exposures. As of June 30, 2025, the company reported a Gross Loan Portfolio (GLP) of PKR 4,835 million, serving approximately 170 active borrowers. Portfolio build-up remains in an early growth phase, with the company seeking to expand its footprint through targeted sector initiatives. PFSL has also introduced thematic funding avenues, most notably the Green Action Bond, to channel investments into environmentally focused projects, supporting the institution’s sustainability agenda and diversifying its funding profile.

Parwaaz Financial Services Limited (PFSL) is a wholly owned subsidiary of Karandaaz Pakistan Limited, which holds 99.99% of the company’s shareholding, with the remaining nominal stake held by individual shareholders. Karandaaz Pakistan is a not-for-profit company sponsored by leading international development partners, including the Bill & Melinda Gates Foundation and the UK Foreign, Commonwealth & Development Office (FCDO).

The company’s ownership profile is considered stable, as no significant changes are anticipated in the foreseeable future given that Karandaaz Pakistan Limited maintains a 99.99% controlling stake. The strong and long-term commitment of the parent entity provides continuity in strategic direction and reinforces confidence in PFSL’s governance framework and access to potential sponsor support.

The sponsoring entity, Karandaaz Pakistan Limited, possesses over a decade of experience in Pakistan’s financial services and development finance landscape. Through its significant investments across multiple corporate sectors and long-standing engagement in SME financing, Karandaaz has developed a robust business profile and deep industry insight. This extensive sector knowledge and investment track record provide Parwaaz Financial Services Limited (PFSL) with strong strategic guidance, prudent growth orientation, and access to best practices in risk management and operational execution. The sponsor’s relevant exposure in the financial sector enhances PFSL’s capacity to expand its lending portfolio while maintaining disciplined credit standards.

Parwaaz Financial Services Limited (PFSL) benefits from the strong financial profile of its parent, Karandaaz Pakistan Limited, a not-for-profit development finance company sponsored by the Bill & Melinda Gates Foundation (BMGF) and the UK Foreign, Commonwealth & Development Office (FCDO). Karandaaz reported an asset base of approximately PKR 40 billion as of June 2024 with no external leverage, reflecting substantial balance-sheet strength and prudent financial management. The backing of these globally recognized institutions provides PFSL with enhanced capital access, credibility, and stakeholder confidence, supporting its ability to pursue sustainable growth and maintain a strong financial position.

Parwaaz Financial Services Limited is overseen by a six-member Board of Directors comprising two independent directors (including the Chairperson), three nominee directors representing the parent company, and one executive director (the Chief Executive Officer). The board brings together extensive expertise in banking, corporate finance, development finance, digital transformation, and public policy, ensuring a well-rounded governance framework. Members include seasoned professionals with decades of leadership experience at leading local and international financial institutions, as well as specialists in regulatory compliance, ESG, and digital financial inclusion. This mix of independent and sponsor representation supports balanced decision-making, strategic oversight, and adherence to regulatory requirements, providing a strong foundation for prudent risk management and sustainable growth.

The Board of Directors comprises seasoned professionals with extensive experience in banking, finance, development, and digital transformation. Mr. Shehzad Naqvi, the Chairperson and an independent director, brings over three decades of leadership experience in global and emerging markets, having held senior roles at Citigroup, ABN Amro, and Royal Bank of Scotland with expertise in credit, corporate, and investment banking. Mr. Javed Iqbal, the Chief Executive Officer, offers 30 years of diversified banking experience in investment, corporate, commercial, and SME banking, with prior leadership roles at Faysal Bank, United Bank, Standard Chartered, and Bank Alfalah. Mr. Yameen Kerai contributes significant expertise in corporate finance and strategic management gained through senior finance positions at ABN AMRO, NIB Bank, and other international institutions. Mr. Amir Naeem brings over 26 years of experience in financial management, regulatory compliance, and sustainability within the development sector. Ms. Shumaila Rifaqat adds valuable knowledge in governance, public policy, and economic reform through her work with DFID, the World Bank, and the Asian Development Bank. Mr. Sharjeel Murtaza provides extensive experience in digitalization, transformation, and financial inclusion through his current role as Chief Digital Officer at Karandaaz Pakistan. Collectively, the board offers a strong blend of strategic, financial, and operational expertise to guide PFSL’s growth and risk management.

The Board of Directors has established four key committees: the Human Resource Committee, the Risk Management Committee, the Information Technology Committee, and the Audit Committee. The Audit Committee is chaired by Mr. Yameen Kerai, while the Risk Management Committee is chaired by Mr. Nauman Ansari. These committees enhance the board’s ability to provide strategic direction, oversee risk management, and maintain strong internal controls. Minutes of all committee meetings are effectively recorded and maintained, ensuring transparent documentation of deliberations and decisions and reinforcing the board’s commitment to sound governance and regulatory compliance.

The company’s external auditors are A. F. Ferguson & Co., one of the Big Four audit firms and listed in Category A on the State Bank of Pakistan’s panel of auditors. They have expressed an unqualified opinion on the company’s financial statements for the year ended December 2024, reflecting compliance with applicable accounting standards and supporting the credibility and transparency of PFSL’s financial reporting.

Parwaaz Financial Services Limited operates through a clearly defined organizational framework comprising six core functions: Business, Risk and Compliance, Information Technology, Human Resources and Administration, Finance and Secretarial, and Digital Services. Each department is led by a functional head who reports directly to the Chief Executive Officer, ensuring well-established reporting lines and effective oversight. Within each function, a structured hierarchy provides appropriate delegation of authority, facilitates coordination across departments, and supports smooth day-to-day operations. This arrangement enables efficient decision making, accountability, and timely implementation of management directives in line with regulatory and strategic objectives.

Parwaaz Financial Services Limited is led by a team of qualified and experienced professionals with extensive exposure in their respective fields. Mr. Javed Iqbal, Chief Executive Officer, possesses over three decades of diversified banking experience in investment, corporate, commercial, and SME banking, having successfully led SME and commercial business segments at Faysal Bank, United Bank, Standard Chartered Bank, and Bank Alfalah. Mr. M. Atif Kauser, Chief Risk Officer, has nearly thirty years of banking experience with a strong focus on risk management across consumer, SME, and corporate segments, and has previously served as secretary to the Board Risk Committee at Silkbank for more than a decade. Mr. Bilal Mohyuddin, Chief Financial Officer, is a Fellow of the Institute of Chartered Accountants of Pakistan with twenty years of experience in finance, assurance, risk advisory, taxation, and restructuring, gained through senior roles in both financial institutions and Big Four audit firms in Pakistan and the Middle East. Mr. Hassan Yasser, Head of Business, brings more than two decades of expertise in SME and commercial banking, business development, product innovation, and relationship management. Mr. Chaudhry Iftikhar, Chief Technology Officer, offers eighteen years of experience in software engineering and fintech innovation, including leadership in developing regulated digital financial solutions and implementing large-scale technology transformations.

The management has established three key committees namely the Management Committee, the Management Credit and Risk Committee and the Asset Liability Management Committee to facilitate smooth operations and strengthen internal oversight. Each committee works with clearly defined roles and responsibilities covering strategic implementation, risk identification and control, credit approval and funding management. Their structured mandates, along with clear reporting lines and effective recording of meeting minutes, enhance decision making, ensure regulatory compliance and contribute to the overall effectiveness of the organizational structure.

The company operates an in-house Management Information System named Cascade, which supports the digitization of loan origination and portfolio management processes. For accounting and financial reporting, the company utilizes Microsoft Dynamics, enabling accurate data capture, timely reporting, and effective monitoring of financial and operational performance. The integration of these systems enhances efficiency, supports internal controls, and facilitates informed decision making across the organization.

The Board of Directors holds overall responsibility for establishing and overseeing the company’s risk management framework. A comprehensive risk management policy is in place that defines the processes for identifying, assessing, monitoring, and mitigating key risks. Implementation of this framework is supported by various board and management level committees, including the Risk Management Committee, the Management Credit and Risk Committee, and the Asset Liability Management Committee. These committees ensure that risk controls are effectively applied, regulatory requirements are met, and emerging risks are promptly addressed, thereby strengthening the company’s ability to maintain a prudent risk profile while pursuing its business objectives.

Pakistan’s macroeconomic environment remains challenging despite signs of gradual recovery. In FY24, nominal GDP stood at approximately PKR 105.6 trillion, reflecting real growth of around 2.5 percent year on year compared to a 0.2 percent contraction in FY23. Industrial activities contributed roughly 21.3 percent to GDP during FY24, while the manufacturing segment accounted for about 13.9 percent of value addition. In 2QFY25, the economy recorded real growth of about 1.7 percent compared to 2.5 percent in the same period last year, with agriculture growing by 1.1 percent, the industrial sector contracting by 0.2 percent, and services expanding by 2.6 percent. Within the financial sector, the Non-Banking Finance Companies (NBFC) industry held total assets of around PKR 6.2 trillion as of 6MFY25. The largest share was represented by mutual funds and plans at PKR 4.4 trillion, followed by discretionary and non-discretionary portfolios at PKR 712 billion and non-banking microfinance companies at PKR 321 billion. Conventional assets accounted for about 65 percent of the industry’s total, while 35 percent were Shariah-compliant. Investment finance companies continue to face strong competition from commercial banks; however, a significant financing gap remains in the SME segment. Pakistan hosts an estimated 5.2 million SMEs operating across formal and informal sectors, representing roughly 90 percent of private businesses, employing about 30 percent of the workforce, and contributing around 40 percent to annual GDP. As of December 2024, outstanding SME loans were recorded at approximately PKR 641.35 billion across about 183,987 active borrowers. SME finance constitutes only about 6 percent of private-sector credit, while the non-performing loan ratio for the sector remains elevated at around 14.5 percent, highlighting both the growth potential and the inherent credit risks within this underserved market.

Parwaaz Financial Services Limited is a relatively new entrant in the investment finance and SME lending market but has demonstrated rapid growth since commencing operations about two years ago. The company has built a loan portfolio exceeding PKR 4.8 billion with negligible non-performing loans, reflecting prudent risk management and effective credit assessment practices. Although PFSL’s market share remains small compared to established competitors, the early build-up of a quality portfolio and the adoption of structured risk mitigation strategies underscore its ability to establish a growing presence in the SME financing space.

PFSL’s revenue grew by ~62% during CY24, reaching PKR 1092 million (CY23: PKR 674 million; CY22: PKR 234 million). However, during 6MCY25, it is standing at PKR 433 million. Markup on advances contributed ~47% to the total income, reflecting an increase in the company’s loan portfolio.

The company’s PAT stood at PKR 53 million in CY24, marking a decline compared to CY23 (PKR 87 million; CY22: PKR 73 million). However, during 6MCY25, it is standing at PKR 4 million. .Personnel expenses rose by 26.8% to PKR 175 million (CY23: PKR 138 million; CY22: PKR 83 million) due to inflationary pressures and expansion in human resources. The company continued to benefit from below-commercial-rate funding from its parent, supporting earnings sustainability.

PFSL is constantly working to increase its customer base. Moreover, the company is in the process of introducing digital services that will enhance the accessibility of the customers by digitizing the end-to-end process. However, going forward the dynamics of price competition with financial institutions including banks will be important in assessing the sustainability of the organization.

Parwaaz Financial Services Limited maintains a dedicated risk management function responsible for assessing the creditworthiness of potential borrowers and ensuring that all documentation, collateral, and security requirements are in line with the company’s credit extension policy. An in-depth credit management policy provides clear guidelines on portfolio diversification and includes limits to control group and sector exposures. The structured credit evaluation process, supported by internal risk rating tools and ongoing monitoring, helps mitigate concentration risk and supports the maintenance of a sound asset quality profile.

Parwaaz Financial Services Limited is exposed to market risk primarily through fluctuations in interest rates, which can affect both its borrowing costs and the yield on loan receivables. The company mitigates this exposure by maintaining a conservative investment strategy, with the investment portfolio largely comprised of government securities, which provide stability and predictable returns. As of June 2025, PFSL’s investment portfolio stood at approximately PKR 948 million compared to PKR 20,803 million in CY24 and PKR 1,645 million in CY23, reflecting prudent liquidity management in a changing interest rate environment.

The company’s funding profile is currently supported by equity contributions and a subordinated loan from the parent company at a concessional rate of KIBOR minus 2 percent, which has helped reduce finance costs and supported early profitability. PFSL has also diversified its funding base through the issuance of a Green Bond, the proceeds of which have been successfully deployed to expand the loan portfolio. While these sources provide a stable funding foundation, the company’s future growth will depend on its ability to secure additional financing at competitive rates. Management plans to pursue commercial borrowings and potential additional bond issuances to sustain portfolio expansion and maintain adequate liquidity to meet business requirements.

As of June 2025, Parwaaz Financial Services Limited reported equity of PKR 1,823 million compared to PKR 1,819 million in CY24 and PKR 1,769 million in CY23. The company’s equity-to-total-assets ratio stood at approximately 29.9 percent (CY24: 7.34 percent; CY23:46.3 percent), indicating a healthy capital buffer despite gradual leverage build-up to support portfolio growth. The debt-to-equity ratio increased to 2.3 times (CY24: 12.5 times; CY23: 1.1 times) but remains within a comfortable range, reflecting a stable capital structure with sufficient capacity to absorb planned expansion while maintaining regulatory compliance and financial flexibility.