The earthquake of October 8, 2005 was a tragic incident that hit the hardest on the livelihoods of those who were already poor, and accentuated their vulnerability due to lack of skills, difficult terrain, inaccessibility and inadequate linkages to the market. The extent of damage to livelihoods was compounded by loss of lives, injuries, destruction of houses, shelter, productive assets, and damage to social, physical and transport infrastructure.

Khushhali Bank Limited (KBL), the largest microfinance bank in the country, in an effort to provide some respite to the affected, capitalized on its longstanding relations with various NGOs and service provider agencies to help mobilize poor households into community groups and provide group members with financial and social services. These business principals of community based service delivery fostered active participation and ownership of the KBL program at grassroots level. Hence KBL leveraged upon its established experience and developed the Earthquake Livelihood Rehabilitation Program (ELRP).

The objective of ELRP was to provide substantial and immediate response to the poor in the nine districts declared as disaster affected areas with an objective to restore income flows, reduce dependence on relief, revive local economies and provide shelter whilst undertaking livelihoods. To achieve these objectives Khushhali Bank with its extensive network of branches was the designated implementing agency. KBL used its own organizational structures and personnel and coordinated with service providers for immediate outreach to affected households. For immediate response, State Bank of Pakistan (SBP) issued licenses and KBL in addition to its existing branches in Abbottabad & Muzaffarabad established six new branches in the affected districts of Neelum Bagh and Poonch in AJK province and Batagram, Kohistan and Shangla in NWFP.

Overall the project was a success as the total funds including the US$ 38 million fund established in SBP to finance the ELRP was efficiently managed by the Earthquake Livelihood Rehabilitation Fund (ELRF) Committee which was set up to ensure the proper utilization of funds. Furthermore, the graduate clients of the rehabilitation phase were provided access to KBL’s mainstream financial and social services and over 9,500 community groups were formed for the provision of equity support and working capital loans, reaching over 70,000 households and restoring their livelihoods.