RCDP was established on November 3, 2015, as a non-profit organization under Section 42 of the Companies Ordinance, 1984. Its core objective is to provide cost-effective microfinance services to underserved individuals, thereby promoting their inclusion in economic activities and contributing to sustainable community development.

RCDP emerged as an independent entity following its separation from the Rural Community Development Society (RCDS), which was established in 1995 under the Societies Registration Act, XXI of 1860, to deliver integrated development services across Punjab. In 2016, RCDS restructured its operations to align with regulatory requirements, leading to the formation of RCDP to oversee microfinance activities, while RCDS continued to focus on social development programs. RCDP now operates under a license from the Securities and Exchange Commission of Pakistan (SECP) as a Non-Banking Finance Company (NBFC).

RCDP’s core mandate is to provide microfinance services to the underbanked population, with a particular focus on rural communities, to strengthen their economic participation. In addition to financial services, the company is also committed to offering training and education to its clients, empowering them with the knowledge and skills necessary for sustainable growth. RCDP operates an extensive network of 160 conventional branches and 32 Prime Minister’s Interest-Free Loan (PMIFL) branches, serving various districts across Punjab. Additionally, there are plans underway to establish 25 new branches in the Pothohar region, reflecting a strategic focus on expanding presence in this key areas.

RCDP is incorporated as a company limited by guarantee without share capital, indicating its not-for-profit nature and commitment to reinvesting resources toward its developmental objectives.

RCDP’s stability is underpinned by a highly experienced and diverse Board of Directors, ensuring strong governance and strategic direction.

RCDP demonstrates sound business acumen through its strategic focus on serving underserved and rural populations with tailored microfinance solutions. The management team possesses deep expertise in microfinance operations, regulatory compliance, and social impact initiatives. The organization’s decision to restructure as a Non-Banking Finance Company (NBFC) under SECP regulation reflects its forward-looking approach and adaptability to changing regulatory landscapes. RCDP’s ability to sustain operations across a wide network of branches, combined with its integration of capacity-building programs for clients and staff, indicates a strong understanding of both financial sustainability and community development. Its balanced approach between financial prudence and social mission underscores effective leadership and sectoral insight.

While the sponsors possess adequate financial strength, the sustained growth of RCDP is closely tied to their continued ability to mobilize capital through donations and other forms of sponsor support. This capacity to attract external funding remains a critical driver of the organization’s expansion and long-term sustainability.

The Company’s Board of Directors (BoD) comprises of eight members, which includes three independent, four non-executive directors and the CEO as an executive director. The Board is chaired by Mrs. Ayesha Gulzar, who is a non-executive director and has been part of the Board since 2016.

RCDP benefits from the directors' extensive experience, which offers sharp insights. Representing diverse industries such as banking, healthcare, telecommunications, and non-profit organizations, the Board brings a broad range of expertise. Leading the Board is Chairperson Mrs. Ayesha Gulzar, a consultant with over 20 years of relevant experience, who has also worked internationally with Fortune 500 companies across the US and Europe.

To maintain a strong control environment and ensure full compliance with relevant reporting standards, the Company has established four dedicated board committees: (i) the Audit Committee, (ii) the Risk Management Committee, (iii) the Human Resource and Remuneration Committee, and (iv) the newly constituted SEGA (Social, Ethics, Governance, Appeals) Committee. These committees play a vital role in strengthening corporate governance and supporting the board in fulfilling its key oversight responsibilities. Notably, the Audit Committee and the Human Resource and Remuneration Committee are chaired by independent directors

Ilyas Saeed & Company Chartered Accountants are the external auditors of the company. The firm is in the A Category of SBP’s panel of auditors. Furthermore, the Company also has an internal audit department for a greater control framework.

The Company has established a well-structured organizational framework. Its key departments include: (i) Risk, (ii) Operations, (iii) Finance, (iv) Internal Audit, (v) IT, (vi) Communication and Research, (vii) HR, (viii) Administration, (ix) Accounts, (x) Business Affairs, and (xi) Compliance. All departmental managers and heads are appointed and report directly to the CEO, except for the Internal Audit department, which reports directly to the Audit Committee.

RCDP’s management team comprises seasoned professionals with strong expertise across key operational and strategic functions. Led by CEO Muhammad Murtaza, who brings 30 years of experience and has been with the group since 1998, the team includes heads of HR, Finance, Accounts, Risk, Compliance, Internal Audit, IT, and Operations. Most members have been with the organization for over a decade and have held their current leadership roles since 2016, ensuring stability and institutional knowledge. The team’s deep experience and long-standing association with RCDP contribute significantly to its operational effectiveness and strategic continuity.

The Company’s management including the CEO has a practice of conducting monthly review meetings to assess RCDP’s performance and take action on any items highlighted. Internal audit, compliance, and risk departments also present their reports during the meeting which are deliberated upon and issues that are highlighted are then addressed. The involvement of the management is clear to see in the operations; however, the absence of management committees and no minutes maintained for the monthly management meetings are issues that may be improved upon.

RCDP utilizes a Smart MIS system to ensure accuracy, transparency, and real-time tracking throughout the loan process. Once the credit officer submits a completed loan application file, the accounts officer inputs the data into the MIS for initial verification. This centralized system streamlines client information management, supports risk assessment, and enables seamless coordination between departments for appraisals, approvals, disbursement, and follow-ups. The MIS also serves as a reliable tool for monitoring loan performance and ensuring timely client engagement throughout the loan cycle.

The Company has Risk Management and Compliance departments which perform regular ‘surprise’ visits to branches to asses multiple risk and compliance parameters. The risk department targets higher-risk branches with greater frequency than the branches which are low-risk. The product parameters are in place which governs the maximum limit of exposure for a client for each product, and also whether a product may be offered to a new client or not. The Company has a policy of the risk department verifying and approving 100% of cases before disbursements no matter the amount. Furthermore, there is a Risk Management Committee (RMC) at the Board level while a risk management manual is also present.

RCDP has a software sourced from Generic Solutions which allows for real-time report generation. The software encompasses all relevant areas of the Company, and shows information such as NPLs, at-risk portfolio, number of clients, number of disbursements, outstanding OLPs and overdue clients, among other details. RCDP is in in the process of deploying its mobile application to all its branches, enabling centralized monitoring and geo-tagging of customers.

In 9MFY25, Pakistan’s microfinance industry exhibited steady but moderated growth amid economic headwinds and rising credit risk. While borrower outreach and portfolio size continued to expand, the pace slowed compared to previous years, reflecting a more cautious stance by institutions. Asset quality became a growing concern due to a rise in non-performing loans, particularly among microfinance banks. Deposit growth also decelerated, indicating tighter customer liquidity, although overall liquidity remained sufficient. The sector’s lending focus continued to center on micro-enterprises, livestock, and agriculture, with a gradual uptick in consumer lending. A notable development during the year was the decline in interest rates, which provided some relief to borrowers, easing repayment pressure. Despite these challenges, the industry remains a critical pillar in promoting financial inclusion and supporting low-income communities.

As of 9MFY25, RCDP reported a Gross Loan Portfolio (GLP) of approximately PKR 11,081 million, reflecting its strong lending operations and growing outreach within the microfinance sector. This positions the company with an estimated market share of around ~1.85% based on the total GLP of microcredit institutions across the country.

As of 9MFY25, RCDP generated approximately ~PKR 3,796 million in revenue, up from PKR 3,222 million in the same period last year (SPLY), reflecting an year-on-year increase. This growth is primarily driven by a rise in the number of active borrowers and the company’s expanded outreach across operational areas. The resulting increase in loan disbursements led to higher interest income and processing fees, which form the core of RCDP’s revenue stream. The trading business sector remains the largest contributor to the Gross Loan Portfolio, indicating sustained demand within this segment. Additionally, Faisalabad holds the highest district-wise concentration of borrowers, highlighting RCDP’s strong market footprint in the region.

RCDP demonstrated strong and sustained profitability growth, posting a net profit of approximately PKR 881 million as of March 2025, a substantial increase of around 78% compared to PKR 496 million reported in the same period last year (SPLY). This impressive surge in profitability is a clear reflection of the company’s improved operational performance, enhanced financial efficiency, and effective cost management strategies.

The Company's sustainability is supported by its planned expansion of the branch network into underserved areas, enhancing outreach and access to financial services. Concurrently, investments in technology such as digital loan processing and data systems and are expected to improve operational efficiency and scalability. These initiatives position the organization to sustainably serve a broader population while maintaining its developmental mandate.

RCDP maintains a sound and stable credit risk profile, underpinned by granular exposure, absence of borrower concentration, and prudent risk management practices. As of 9MFY25, the Portfolio at Risk (PAR 30) registered a marginal uptick to 0.4% (from 0.1% SPLY), yet remains at a negligible level, reflecting continued resilience in portfolio quality. The True Infection Ratio also remained stable at 0.4%, indicating consistency in asset quality. Non-performing loans (NPLs) stood at PKR 55 million, with write-offs amounting to only PKR 87,490 as of 9MFY25, highlighting effective recovery and collection mechanisms. Importantly, NPLs classified under “doubtful” and “bad” categories comprised just 0.3% of the Gross Loan Portfolio (SPLY: 0.13%), which remains well within acceptable risk thresholds. Overall, the asset quality metrics point to sound underwriting practices and a well-diversified loan book, with no indication of concentration risk or large exposure vulnerabilities.

RCDP maintains a conservative investment strategy, primarily placing funds in short-term bank deposits. As of 9MFY25, the total invested amount was PKR 359 million, slightly lower than PKR 400 million in the same period last year. These placements are held with well-rated commercial banks, which helps to reduce credit risk. The short-term nature of these deposits limits exposure to market fluctuations. However, changes in interest rates can influence the income earned from these placements, making interest rate trends an important consideration for future investment decisions.

RCDP’s primary source of funding continues to be the Pakistan Microfinance Investment Company (PMIC). In a positive development, the sanctioned limit has been enhanced from PKR 4 billion to PKR 5 billion, reflecting growing confidence in the company’s operational and financial performance. As of 9MFY25, total funding reached approximately PKR 4,769 million, marking a substantial increase from PKR 3,536 million in the same period last year. This notable rise underscores the company’s expanding financial capacity to support its growth and outreach objectives.

As of 9MFY25, RCDP’s current ratio improved to 2.6 (FY24: 2.4), reflecting a strong liquidity position and the company’s continued ability to meet short-term obligations with ease. The cost per loan disbursed increased from PKR 7,377 to PKR 10,601, primarily driven by the company’s expansion into new geographic areas and investment in upgraded technologies aimed at improving service delivery and operational reach. Despite the rise in operational costs, RCDP’s interest coverage ratio improved to 1.87 (FY24: 1.56), indicating enhanced capacity to meet interest obligations through operating earnings. This improvement suggests that revenue growth has outpaced the increase in financing costs, reinforcing the company’s financial resilience and operational scalability.

RCDP maintains a stable capital position, with its Capital Adequacy Ratio (CAR) increasing from 35.6% in FY24 to 38.8% in 9MFY25. This increase exceeds regulatory requirements and indicates the company has an adequate buffer to absorb potential losses and support growth. At the same time, the gearing ratio (debt to equity) decreased slightly from 2.03 in FY24 to 1.98 in 9MFY25, reflecting a modest reduction in leverage. This suggests that RCDP is gradually lowering its reliance on debt relative to equity, which can help reduce financial risk and improve its ability to meet obligations during periods of stress.