PACRA Maintains Entity Ratings of Parwaaz Financial Services Ltd.

Parwaaz Financial Services Limited (PFSL or the Company) is a wholly owned subsidiary of Karandaaz Pakistan, which itself is a not-for-profit company established under Section 42 of the Companies Act, 2017. Karandaaz operates with the support of the Foreign, Commonwealth and Development Office (FCDO), United Kingdom, and the Bill and Melinda Gates Foundation, and serves as an implementation partner for a range of financial inclusion and enterprise development initiatives in Pakistan. PFSL was incorporated in 2020 with the mandate to expand access to tailored financial solutions for small and medium enterprises. The Company focuses on critical sectors of the economy, including agriculture and industrial value chains, renewable energy, healthcare, and education. PFSL has also emerged as an innovator in the domestic financial landscape by introducing products such as digital lending, invoice discounting, warehouse receipt financing, and, more recently, sustainable finance instruments. The launch of Pakistan’s first PKR-denominated Green Action Bond in March 2025 reflects PFSL’s commitment to promoting environmental, social, and governance-aligned practices while supporting the broader development agenda of inclusive and sustainable growth. As of 1HCY25, PFSL’s indigenous portfolio constitutes ~69% of deployed advances, whereas ~31% is constituted by the funding disbursed on behalf of KRN. The Board of Directors of PFSL provides independent oversight and is composed of seasoned professionals with diverse technical expertise. Governance is further strengthened through the effective functioning of formal board committees. The company is supported by a skilled team of professionals and operates under a robust risk management framework that includes comprehensive risk identification, assessment, and mitigation practices, strengthened by an internally developed Obligor Risk Rating Model to maintain asset quality. Accordingly, the ratings continue to draw strength from the backing of KRN, a well-structured governance framework, an experienced management team, and a comprehensive risk management system. An estimated 5.2mln SMEs are operating in the formal and informal segments across the country, as per the statistics published by SBP, as of Dec-24, outstanding loans to the SMEs were recorded at PKR 641.3 billion (CY23: PKR 542.5bln), extended to ~183,987 active borrowers (CY23: ~172,300), reflecting a significant gap in the SME financing sector. PFSL is strategically positioned to strengthen its role as a key player in the industry. The Company has built a loan portfolio of ~PKR 4,835mln, with asset quality remaining sound. Its growing outreach is evident from an expanding and diversified customer base across multiple sectors. Currently, PFSL’s funding profile is supported by equity of ~PKR 1.5bln, a concessional loan of PKR 1.5bln from its parent, and a Green Action Bond of PKR 1bln. To support its ambitious growth trajectory, the Company plans to tap various alternative financing avenues, the successful realization of which will be vital in ensuring sustainable expansion. Equity augmentation also remains part of the future roadmap. Moreover, PFSL has implemented an end-to-end digital loan disbursement platform, enabling greater outreach, improving customer experience, and enhancing operational efficiency.
The ratings are contingent on the Company’s ability to materialize the envisaged strategy for the growth of its footprint and loan portfolio while ensuring a stable profitability matrix. Moreover, prudent risk management, sustainability of a healthy asset base, and conversion of the subordinated loan into equity and mutually agreed financial discipline will remain imperative to the ratings.

About the Entity
PFSL was incorporated in December 2020 under the Companies Act, 2017. The Company obtained the license to carry out investment finance services as a Non-banking Finance Company under the NBFC (Establishment and Regulation) Rules 2003 and NBFC and Notified Entities Regulations 2008. Mr. Shehzad Naqvi is the chairman of the board, whereas Mr. Javed Iqbal is the CEO. Both are experienced professionals with industry experience of over 3 decades.