Urban Poverty Alleviation Program

(Part of NRSP)  

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Brief History Methodology Area of Operations Clients Poverty Focus
Distinctive Features Innovations Financial Results Inclusion in Financial Sector Sources
Challenges & Development Plans


Brief History

The Urban Poverty Alleviation Program (UPAP) is a subsidiary program of the National Rural Support Program (NRSP), the largest Rural Development Program (RDP) in Pakistan. UPAP was established in June 1996 in the urban areas of Rawalpindi and Islamabad, with funding from UNDP.   Since then it has experimented various lending strategies, first modelled on the Grameen Bank, and extended its operations into two more major cities, Faisalabad and Karachi.



UPAP extends microcredit services to finance income-generating activities only.  UPAP utilises a solidarity group approach, and enforce strict repayment discipline through peer pressure and close group supervision.  UPAP establishes loans centres in settlements of typically 4,000 to 6,000 households.  Staff (local and non-local) are recruited and trained on the basic microcredit principles. They become responsible for the monitoring and recovery of loans made to borrowers residing in the settlement. 

Group methodology gives UPAP time to assess borrowers capacity, to minimise costs to serve a large customer base, and to make the best use of group solidarity in case of problematic repayment.

UPAP is particularly concerned with potential misuses in implementing a lending program in settlements and thus has emphasised the set up of transparent, secure systems to govern UPAP lending procedures.  High recovery rates are rewarded with annual staff bonuses.  UPAP implements an incentives scheme to maintain its very low delinquency rate.



Area of Operations

UPAP operates three branches in the Pakistani cities of Islamabad and Rawalpindi (one branch), Karachi and Faisalabad. It currently serves 48 settlements.



UPAP serves poor Pakistani men and women of urban areas, though it does place special emphasis on its services to women.  Despite the fact that almost 100% of borrowers are women, only 36% undertake directly the economic activities financed by the UPAP loans, most often it is their husband (44%) that would run the business. Currently it serves 16 878 clients, all of those are borrowers.  6,000 of these clients have borrowed from UPAP more than one time. 60% of loans will finance existing businesses, while 40% will go to new ventures. Two thirds of UPAP clients are illiterate. Only 0.50% of UPAP clients are late borrowers.

Active clients

Active savers

Active borrowers





99.6% women

As of 31 December 2003



Poverty Focus

75% of UPAP clients with a loan size inferior to Rs.10,000 (US$181). 48% of the clients will have an income between Rs.500 and 1,000, 10% less than Rs500.



Average outstanding loan size  (US$)

Average outstanding loan size / GNP per capita

Average deposit size (US$)




As of 31 December 2003


Distinctive Features

UPAP posts very high recovery rates, even for microfinance, with a 99.97% on time collection rate and a 99.9% cumulative recovery rate.


Moreover, UPAP maintains very low overhead costs, thanks to different factors, such as a recruitment of graduated people requiring low salaries, small offices rented cheaply in settlements, serving the population nearby (4000-6000 households) without the requirement of vehicles.




UPAPís strong anti-corruption stand among its staff is something noticeable in the financial  services industry. The opportunity for rent seeking behaviour in the microfinancing sector is apparent, and UPAP has implemented a structural policy to minimize it, such as on-site investigations of  area  manager  to minimize field staff potential misappropriations, an MIS generating daily monitoring reports, and quarterly report disclosing problems and solutions openly.

UPAP charges interest rates on a daily basis, which facilitate computations and early repayments.



Financial results

Despite the national UPAP being still dependent on subsidy to reach full sustainability, the oldest and largest branch, Rawalpindi/Islamabad, is financially self sustainable (113.8%).


Loan Portfolio (US$)

Portfolio at risk

Savings Deposits (US$)


RoE / RoA




83.9% / 81.9%

/ -1.3

As of 31 December 2003



Challenges and development plans

UPAP is going to be rated by an international rating agency, and is currently exploring the idea of becoming a regulated microfinance bank.



Inclusion in financial Sector

UPAP does not have formal links with the financial sector, but intends to become a regulated institution, supervised by the central bank of Pakistan.



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