PREFACE

ACKNOWLEDGEMENT:
This Internship report marks the end of my four year Bachelors of Commerce. First and foremost I
will thank Allah Almighty who gives me chance to study in the best Commerce institute of Asia &
then my teachers who taught me not only the bookish knowledge but also the keen sense of
responsibility, confidence & a way to believe in my own self.

Then I would like to thank Miss Sadaffe Abid (Chief Executive Officer) Mr Amir Ramzan (Manager
Accounts & Finance), Miss Fiza Farhan (Business Development Manager) & Mr. Mubasahir Shah
(Senior Accounts Officer) who painstakingly taught me the working & help me to correct trillions of
my mistakes. It’s all due to then that I successfully complete my internship & is now a much more
learned person then I was before. Although I was taken in as an Accounts Officer the management
seeing my interest in others areas kindly allowed me to learn the functioning of them as well. For
which I am extremely grateful.

Lastly, I would dedicate this effort to my parents & peers who became not only my
support but also a power to complete this whole program.
 Buksh Foundation’s Corporate Vision:

Buksh Foundation’s vision is to empower the

underprivileged, to make them productive and to

create equity in the society. To achieve scale

sustainably, to be innovative in our approach and to

create measurable impact on the global economy as a

whole.
 Buksh Foundation’s Mission:

Buksh Foundation mission is to

contribute to an equitable and prosperous
Pakistan where every human life is
valued and respected through delivering
inclusive financial services to the un-
banked segment.

Buksh Foundation’s Core Values

 Core values are instrumental in guiding organizational culture, its spirit and
identifying positive behaviors and attitudes. All Buksh Foundation team
members believe in the following values:

• Honesty, fairness and respect: I give my colleagues and our clients respect, treat them
fairly and am honest in all my interactions.

• Service: My Clients are my priority and my job is to understand and satisfy their needs.
We strive for mutual prosperity.

• Improvement: I strive consistently to improve what I do and ensure quality, efficiency

and financial viability.

• Team work: Our success depends on helping each other succeed and my commitment to
team work.

• Openness to change and responsibility: I communicate, am open to change and share

responsibility for realization of our mission.

THE OBJECTIVES OF BUKSH

• Provide inclusive and a wide range of financial services including credit, money transfers,
inward remittances, insurance and other value added financial services to clients at the base
of the pyramid.
 • Build a cost effective and financially sustainable microfinance institution centred on the
clients and a brand that exudes trust, respect and integrity. BF aims to generate financial
return and social value.
• Strong focus on human resource training and development with major emphasis on youth
and women.
• Extend business development services and develop market linkages for clients from low
income households including rural agriculture through partnerships
• Demonstrate and measure impact by enhanced client income, increased asset base and focus
on empowerment

History:

The Buksh Group (Pvt) Ltd is one of the leading business groups in Pakistan’s retail market and
has a distinguished history, various successful business ventures and exclusive links with
numerous international names. Established in 1948 by its initial Chairman Saeed Ahmed Buksh,
the group has continued to develop under the directives of his sons, Asim (CEO), Saqib
(Director) and Usman (Director). Buksh Foundation was incorporated on April 16th, 20009
under section 42 of companies ordinances 1984. It’s a non-profit micro financing
institution with a vision to help deprived and also to develop women enterprenures.
 1. CORPORATE GOVERNANCE

Effective governance is essential for the success of an organization. Buksh Foundation

believes that a strong governance structure will play a pivotal role in realizing its vision and
strategy. The Foundation received its license under section 42 of the Companies Ordinance 1984 as
not profit organization, on April 16th, 2009. The Foundation has a progressive and professional
board, bringing a variety of skills, perspectives and rich experiences to ensure strategic
development and institution building.

4.1 Board Composition

The following are the board members of Buksh Foundation:

Malcolm Harper
Wasif M Khan
Dr. Abid Bilal
Amena Arif
Asim Buksh
Sadaffe Abid

Management:

• Amena Arif
Amena is a seasoned banker with 15 years of work experience in corporate/commercial banking
in Pakistan. She has primarily held front office roles including most recently as the country head
for Citi Bank’s initiatives of strategy and integration in Pakistan. She is also the country
commercial head for Citi Bank and before that has held positions as country human resource
officer, cash management head for the North, relationship manager at Citi Bank. She started her
career as a relationship manager at ABN Amro Bank. A gold-medalist MBA from the Lahore
 University of Management Sciences (LUMS), Amena has undertaken numerous international
training sessions and development courses which have groomed her professional career.

• Asim Buksh
Asim is the founder of a dynamic, high end, luxury Retail
Company, Buksh Group. With its inception in 1993, Buksh Group
has repeatedly proven itself with sustained revenue and growth in
changing markets. From fashion to sound and technology, jewelry
and automation, the company has defined new directions which
are both challenging and exciting. With sales in 35 outlets
nationwide and an asset base of US$ 60 million, Buksh Group
entails top brands from around the world within its umbrella.

As his most recent venture, Asim has founded Buksh Foundation,

with a vision to convert it into a micro finance Bank aiming to offer a
range of financial services to the un-banked low income households. Furthermore, Asim is
pioneering in bringing alternate and renewable energy solutions to the 54% of Pakistan which
lacks access to electricity, through the founding of Buksh Energy Pvt. Ltd. He has Master’s in
Business Administration (MBA) from Lahore University of Management Sciences (LUMS) and a
Bachelor’s degree in Economics from Govt. College, Lahore.

Sadaffe Abid,

Founder and CEO Buksh FoundationSadaffe brings twelve years of

on the ground microfinance experience, running one of the leading
microfinance organizations in the country, Kashf Foundation. Prior
to this, she did two years of consulting, involving assessments of
World Bank and Asian Development Bank projects in the social
sector. She joined Kashf Foundation in its start up phase as a
Research analyst when it had less than 100 clients. Along with
handling research and business development, she set up the first
branch and then a series of additional branches in Lahore,
Sheikhupura, Gujranwalla and other nearby districts as the Operations Manager. Sadaffe then
moved to the position of Chief Operating Officer in 2003 where she was responsible for
designing and executing business strategy, aligning the HR function and ensuring quality
growth along with realization of social goals of the organization. In 2006, she was promoted to
be the Chief Executive. In 2008, she decided to move on to explore new arenas. When she left
Kashf, it had grown to 150 branches, 2000 staff members with an outreach of 300,000 clients and
a portfolio at risk under 2%. She has received several scholarships to attend high quality
international courses including HBS-ACCION course on Strategic leadership for microfinance
 (2009) and Strategic perspectives in non-profit management at the HBS (2008). Sadaffe is
committed to delivering finance to the unbanked and exploring innovative ways for
empowerment, consciousness raising and change. She brings expertise in operational
management, strategy, people development, institution building as well as research and
product development.

Fields of Activity:

Product and Services

Buksh Foundation brings a strong understanding of the bottom of the pyramid and envisions
differentiating itself by offering efficient and client friendly financial products and services. The
analysis of the current market indicates high transactional costs of borrowing due to rigid rules
related to attendance at meetings, group formation as well as mandatory trainings.
Buksh Foundation’s competitive edge lies in:

 Implementing an efficient and innovative system for client identification. All new loans will be
disbursed within 5 days following best practices in individual lending.
 Provision of credit products for women and men, focusing on the entrepreneur. The basis of this
strategy includes a holistic focus towards poverty engaging men and women in promoting
entrepreneurship. A household and business cash flow analysis of the loan applicant will be
undertaken for assessment.
 Focus on business development creating a value proposition through developing linkages and a
particular focus on enhancing women’s capabilities.
 A culture valuing service and customer care with systems in place to solicit client feedback and
continuous focus on service improvements.
 Reducing the transactional cost of borrowing by simplifying systems for installment collection
and reducing frequency of meetings to monthly. In typical individual lending, there is no
concept of meetings and clients come to the branch monthly to make payments allowing an
opportunity for interaction. PAR is maintained at under 1.5%.
 Strong monitoring and compliance with rotation of business analyst portfolios every quarter
and regular compliance reviews

Loan Products

An initial financial review of the needs of the low income households and entrepreneurs
indicates a strong demand for business, agriculture, emergency, education, home financing as well
as an opportunity to finance clean energy products. The service sector is another area where
transportation loans for rickshaws, motor bikes and scooters for working women and entrepreneurs
can be offered. Buksh Foundation’s flagship product includes a business loan available within 5
days to small groups. Based on the client’s performance and reliability demonstrated in the first 4
months, a top up business loan will be extended.

A home financing facility will be designed in the first year of operations. On the home financing
front, there are several interesting avenues to explore including developing a full housing project
over a dedicated piece of land. After the initial down payment, a financing facility would allow the
client to purchase land and undertake construction. Buksh Foundation will be preparing a detailed
feasibility study and business plan for this product. At any given time, a client will be able to take a
maximum of two loans.

Buksh Foundation believes in responsible finance and aspires to balance the triple bottom line of
“profits, people, and planet”. It aims to maintain financial viability along with advancing the social
interests of stakeholders and protecting the environment. The Foundation activities include a
promotion of clean energy products in partnership with its sister company, Buksh Energy. Thus,
Buksh Foundation would contribute significantly to carbon reduction, enter a new market niche
and reach out to a large number of new clients while growing its portfolio. The Foundation’s
financing will enable households to make the switch to clean energy products such as solar lamps,
solar panels, solar stoves etc which would otherwise take them several years to fund. Solar lamps
can help extend the business hours into the evening and allow children to do home work. There are
thousands of households using wood, dug or coal and can be provided improved cook stoves,
hence cutting household energy expenditure and improving health. The repayment of these
products would match the current energy expenditure of the household thus making the product
affordable. Further research would be undertaken to design the financing structure for clean
energy products. Moreover, Buksh Foundation as an entity will demonstrate commitment to
reducing carbon footprints and net emissions emerging from its core business operations.

The initial product offerings include two credit products and preparation for launch of a home
financing as well as solar energy solutions.

The following table summarizes our current credit offerings

1st cycle
disbursement
Product Offerings Term (Months)
Upfront Fee in $ upper limit in Rs.
Service /(USD)
charge

12
Rs. 20,000 for lower
Business Loan With longer Effective interest Rs 250 ($3.13) charged on income client
term options for rate of 36% loans up to Rs30,000 ($375)
($250)
repeat clients annually

Effective interest Rs. 8,000

Top up loan 4-6 rate of 36% Rs 100 ($1.25)
annually ( $100 )

Insurance
Low income households face a multitude of risks making them extremely vulnerable to loss of
income and financial disasters. Micro insurance can play a key role in enabling households to
manage risks. While there are growing examples of life insurance, health insurance is a relatively
new frontier increasingly being recognized as a preferable mechanism to finance health care
provisions. In Pakistan, access of low income households to insurance remains low with 2.2 million
policy holders and a sum of Rs 34 billion ($425 million) insured. Health insurance pools and
transfers the risk of unforeseen health care costs for a pre determined fixed premium. Health
shocks create stress for a family as they lead to direct expenses for medicines, transportation,
treatment, medical stay but also result in an indirect loss of income.

Buksh Foundation will provide a safety net for the bottom of the pyramid by offering a life and
health insurance product including a health insurance option for the family. This is in partnership
with First Micro Insurance Agency (FMIA), Pakistan’s first corporate micro insurance agency. FMIA
works with New Jubilee Life, a subsidiary of Aga Khan Fund for Economic Development (AKFED).

Life Insurance product: A mandatory life insurance coverage secures the life of the client and the
spouse for amount 0.153 per thousand, so that in case of death or permanent disability, the burden
of debt repayment does not fall on the family. Furthermore, the nominated family member also
receives Rs. 10,000 ($ 125) to meet funeral and other expenses. Buksh Foundation charges Rs 100-140
($1.25-1.75) commission fee based on the loan size and expects this product to be a viable
proposition. Same staff will be promoting the insurance product as well as the productive loan, thus
realizing efficiency.

Health insurance product: A mandatory health insurance product covers the life of the client and
the spouse for Rs. 50,000 ($ 623) each for hospital and related benefits. Furthermore, households can
choose to opt to insure children. All children from new born to age 25 qualify for this facility as
well as the borrower and spouse whose age is between 18 and 60. To ensure better access and
product understanding, the insurance covers all pre existing medical conditions. Furthermore, to
encourage clients to seek hospitalization when needed, an additional innovative feature, an income
continuation benefit has been introduced. The client or spouse in case of hospitalization will receive
Rs. 300 ($ 3.7) cash per day, up to 5 consecutive days. To manage moral hazard and adverse
selection, the health insurance coverage is mandatory for the client and spouse. There is an element
of choice in terms of buying health insurance for the children.

To ensure quality, a help line will be available for clients to call with inquiries and seek information.
All treatments in the designated private hospitals will be cash-less, another important feature for
family well being and security. In the future, discounts are expected at select pharmacies.

A voluntary product covering complications in maternity such as C section for up to Rs. 50,000 ($
623) has been designed especially targeted towards women. It has a monthly premium of Rs. 50 (62
cents) and carries a wait period of 6 months.
An additional voluntary product is available related to accidental death of the client or the spouse.
It provides a coverage limit of Rs. 100,000 ($1250) and the premium is Rs 10/person (12 cents) per
month.

Type of Insurance Premium Coverage

Life insurance Monthly premium of 0.153 Outstanding loan balance

per thousand would be covered, along
with a Rs. 10,000 ( $ 124)
Fee charged: Rs 100-140
pay out to the family
($1.25-1.75) for health +
life insurance

Health insurance Rs. 36 (0.44 cents) for client , Rs.100,000 ($1250)

Rs. 31 (0.38 cents) for spouse,
Rs.20 (0.24 cents) for 1st and 2
and Child and Rs. 15 (0.18
cents) for rest – monthly
premiums

Maternity complications Rs. 50 (62 cents) per month Rs.50,000 ($625)

Accident insurance Rs.10 (12 cents)/person per Rs.100,000 ($1250)

month

Given low awareness on insurance and its benefits, Buksh Foundation aims to explore innovative
marketing channels and introduce public awareness campaigns to increase knowledge on the
concept of insurance and its benefits. Keeping this goal, a female doctor will visit the Foundation
branch every fortnight at designated times where clients and their children can receive counseling
and medical guidance. This will enhance Buksh Foundation’s impact on the quality of life of its
clients and enable it to develop a more meaningful partnership with its clients.

Group Lending Methodology

All Buksh Branches will operate through forming small groups. These groups are flexible; peer
group of minimum 2 and maximum 7 clients are formed who are self selected and consist of clients
that live in close proximity. After form filling, LOs will make groupings and send forms to the head
office for approval, however the grouping itself has no influence on the approval criteria; each
applicant is assessed individually.

Client profile:
The Buksh Foundation places greater emphasis on female entrepreneurs who have start ups as well
as existing businesses. At the same time, male entrepreneurs will also receive access to financial
services through the group lending methodology.

Loan Process Flowchart:

Community
Meetings

Door to Door
Mobilisation
 Form Filling

Group Formation
and Meeting

Forms sent HO for

evaluation

Approved Rejected

Group Client informed of

approval/reformatio decision the next
working day

DISBURSEMENT

(Next working day)

Organizational SWOT

The organizational SWOT of Buksh Foundation is as follows:

Strengths

• Experience and track record of the CEO in microfinance; Sadaffe Abid was the CEO of Kashf
Foundation, third largest MFI in Pakistan, for nearly 3 years. Sadaffe brings twelve years of
microfinance experience and was part of the pioneering team of Kashf Foundation playing a key
 role in its development and growth. Sadaffe has grass roots experience of building a social
enterprise with a strong focus on people development, systems and business process
improvements. She has a bachelor in Economics and International relations from Mount
Holyoke College, USA.
• Experienced board with diverse and rich experience; Buksh Foundation’s board brings a depth
of experience ranging from banking, microfinance, business management, consulting to
psychology and human resource management. Their rich perspectives and insights will guide
Buksh Foundation in setting strategic direction and accomplishing its ambitious goals.
• Strong operational model and methodology; the Buksh Foundation methodology includes a
group lending approach with two innovations to improve speed of delivery and risk analysis.
A household and business cash flow analysis based on Women World Banking’s proven
individual lending methodology has been coupled with a psychometric tool to gauge the
willingness to pay. The psychometric tool has been designed with the expertise of a
psychologist with 22 years of experience and provides data related to the characteristics and
behavior of the individual. Furthermore, the group size is flexible thus allowing speed and
convenience.
• Focus on capacity building and staff development; Buksh Foundation recognizes that its
success depends on building management capacity and investing in learning. It has engaged an
organizational development company, Bilal Psychological Services for trainings related to
communication, problem solving, conflict resolution and other soft skills. Talent inventory and
staff profiling are underway.
• Effective loan tracking system to ensure integrity and transparency in operations; to ensure
accuracy, reliability and timely decision making, Buksh Foundation has a robust technology
solution, Octopus, being used in 23 institutions globally, with active client base of 80,000 and
below.

Weaknesses

• Access to funds; raising capital for on-lending purposes from local commercial banks is a
challenge given banks conservative stance and liquidity crunch.
• Inexperienced head office team; beyond the CEO, the rest of the team does not have
microfinance experience. However the Buksh Foundation branch team has an average of three
years microfinance experience.

Opportunity

• Huge un-served market; only 6% of the market in Pakistan has access to financial services.
Within Punjab and Sindh, the two provinces where Buksh Foundation will establish its
operations, there are at least 22 million potential clients. Moreover on the supply side, there is
room for professional and well managed institutions to emerge to fill the demand gap.
• Build a brand centered on entrepreneurship and women; in Pakistan, only 53% of
microfinance clients are women. Beyond access, another important concern is women’s control
over the loan. Buksh Foundation attempts to break these barriers by focusing on delivering
 credit for enterprise development including women and men. There is an opportunity to
increase women’s participation in this arena, provide business development skills, market
linkages tackling some of the key constraints faced by women. Buksh Foundation will ensure
that 60% of its total 500,000 clients are women and build strategic alliances to develop women’s
linkages with markets.
• Use of technology to reach scale and reduce costs; Pakistan is one of the few countries globally
with a favorable branch-less banking regulatory framework. This avenue promises gains for
clients and Buksh Foundation, enhancing client experience and bringing down costs of doing
business. Being a new player, adoption of new technology is easier for Buksh Foundation
compared to others which are entrenched in their existing business model.
• Strategic alliances to increase efficiency and scale; There are 13,000 Pakistan Post Offices, over
400,000 outlets of Telecom operators and other such channels that can be used for delivery of
financial services. FMFB and Pakistan Post is the only tried partnership model which has shown
successful results, although data is unavailable.

Threats

• Political interference; Business with the bottom of the pyramid is an area which attracts
political interest and sentiments. Concerns on interest rates charged to low income households
can disturb the operations of an MFI leading to deteriorating portfolio quality.

• Deteriorating law and order situation; the country is facing a weakening of law and order
situation particularly in the Swat and Frontier province. An army operation is currently
underway to tackle the extremists. The Buksh Foundation proposed areas are away from the
conflict and unaffected. Furthermore, it is noteworthy that microfinance has shown resilience
and performed well in conflict ridden areas such as Afghanistan.
MY WORK IN THE ORGANIZATION
(Refer to annexure A)

DEPARTMENT OF ACCOUNTS, TAXATION & FINANCE

 I have learned to use a specially designed Micro finance accounting

software “OCTOPUS PLUS MICRO FINANCE SUITE”.

 I have learned to make all five kinds on vouchers understanding the

mode of transaction.

 I have leaned to make weekly bank reconciliation statements, bank &

petty cash summaries, weekly, monthly capital & operating expense
budget, and calculation of salaries, withholding tax & Employee
monthly benefits.

 I have learned to make cheques, maintain files & keep the records.

DEPARTMENT OF AUDIT:
I was fortunate that the companies external audit come during the period of
my internship, I helped the company’s internal audit department to arrange
previous year data for the External auditors review. In this learned to match
the evidence with voucher, tracking of bank statements, procedures to
maintain the proper accounts. I also assisted the auditors during there
course of audit.

DEPARTMENT OF RESERCH & DEVELOPMENT:

I reviewed the whole loan portfolio of Buksh Foundation. Checked the
Business Analysis Forms, prepared the soft copy of whole loan portfolio,
started the proper & easy to manage filing system. I then prepared a special
portfolio review for the Newsletter and donors of Buksh Foundation.

HUMAN RESOURCE DEPARTMENT:

I worked with HR Department for salary & leave calculation, With their
approval & consent started a new tradition of giving salary slips. I also gave
input in the employee assessment program of Foundation’s first branch. I
also helped in conducting the assessments interviews by talking to individual
employee of Township branch understanding there problems & issues.
Conducted an agenda oriented meeting of the branch staff with the CEO of
Buksh Foundation.

Business Development & planning Department:

I worked with the Manager Business development & prepared documents for
the donors (USAID) of there new project WEEEP (Women Entrepreneurs
Energy Empowerment). I also prepared a presentation for the Manager to
give to the Donor Committee.

Training & Employee Skills Development Department:

I worked with the operations department to conduct a training session of
Township Branch. I discussed the Loan product & future prospects.
Dilemmas Faced By the Organization:

Buksh Foundaion is a new Micro financing institution, Still in phase of structuring,

During the course of my study I observed following problems face by Buksh
Foundation:

NEW ENTITY ISSUE:

As the micro financing insititutions deals specifically with the micro enterprenuer &
low income households which are reluctant to believe in new people &
organizations, are afraid of loan sharks its difficult for Buksh foundation to explore
the market at its full.

Mobilization Issue:

although the unbanked population of Punjab &nly 7.8% of total micro finance
market id covered by MFI. Lahore is an area well covered by MFI. Where the
competition is tough & people are less trusting. So the idea & product benenfit is
not a new thing for customers.

High Operating cost:

Currently Buksh Foundation has a high net loss base as the cost operations is very
high which is due to a very highly paid staff. Foundation right now pays monthy
salary of Rs 500,000 whih is extremely high needs to cut down to half.

Internal Conflict Issue:

The only completely operational branch of Buksh Foundation i.e. Township Branch is
although working at remarkable & efficiency has a sever rise of conflict in the
branch. Loan Officers do not trust & talk to the branch Manager, which will reduce
the productivity of the branch.

Ambigious Policies:

As any other new entity the Foundation is still in its developing stages which at
times become quiet a problem as there are many abigious policies regading
employee benfits, travel expense, insurance etc.

Difficult Hiring Process:

The hiring of Buksh Foundation is down by an out sourced Physcologist who reject
almost every other candidate for one reason or anther & makes the hiring process
slow , costly & at times useless as timely hiring become not only cost effective but
also leads to increased productivity.

Customer Acceptance Rate:

In start the cusrtomer acceptance rate through character ananlysis form was ver
low almost 5%. Now with the revised customer in-take policy the acceptance rate is
increased to 70% which although very for is still very low then the market average.

SOLUTIONS

Foundation should take the following actions to solve the problems mentioned
above:

1. To increase customer base the loan officers should interact more

customers, should arrange community meetings & keep a close &
professional relationship with clients.

2. Buksh Foundation should open its next 2 or 3 branches in the areas

with low market penetration of MFI. So it could enjoy the benefit of
market leader in that particular area. Thus, more business captured.

3. Foundation should reduce the head office staff & should concentrate
on hiring the branch staff as per requirement, not before that. For
example Shahdra branch will start functioning in October but its
manager was hired four months ago. Thus, a lot of funds wasted.

4. clear communication chnnels & better montering of Hr is required to

reduce & avoid conflict among staff.

5. contious improvement is required in Hr, Operations & finance manual

is required

6. a better customer analysis approach is required if the organization is

willing to get public accepatance.
Financial Ananlysis of Buksh Foundation: