You can buy anything on installments in Pakistan

The problem banks ignore

Muzamil opens by contextualizing the three-year journey. Pakistan’s banking system has chosen a path: chase the wealthy and lend to government T-bills. Arif Lakhani saw a gap. “There are 3 crore loan data in ECI week,” he says, meaning only 30 million Pakistanis have formal credit access in a nation of 230 million. The rest turn to unregulated dukaan owners who charge 10 percent interest on non-diminishing balance, sometimes worse. That loan shark is always there. Kist Bazaar came in to formalize that relationship.

Building the physical-digital hybrid

Unlike a pure fintech, Kist Bazaar operates 76 branches across nine cities: Karachi, Lahore, Islamabad, Hyderabad, Kherapur, Sakhar, Faisalabad, and Gujaranwala. Why branches when the internet exists. “We still feel that the average man has not learned to buy digitally yet,” Lakhani explains. “We can’t assume that one fine day the entire Pakistani population will be online.” The branches serve a second function: verification and education. Customers walk in, learn how the system works, and become repeat buyers. For repeat customers, the credit engine takes over. One product approved; if you pay six installments clean, you get a second product. Eventually, algo drives the approval.

Sharia compliance as a business model

Here Muzamil presses on the cost structure. Kist Bazaar is the only company in Pakistan certified Sharia-compliant by the Standards and Audit Council Pakistan. That means Murabaha for most products and Ijara for bikes. “There is no processing charge, no delivery charge,” Lakhani states. “No late charges, no rejection charges, no early payment charges. Everything is defined.” That seems impossible until you see the numbers. The company has issued 120,000 loans totaling 8 billion rupees. Non-performing loans sit below 5 percent. And customers almost never complain about hidden fees. “In 1,20,000 loans, one person would have complained,” Lakhani says. The price markup over retail is 10 to 15 percent, reflecting cost of capital, risk, and the 500 people on staff. That’s it.

Why banks cannot do what Kist Bazaar does

Muzamil pushes deeper. Banks had the chance. Lakhani says he approached six banks before finding Alphala and Bank Al Falah willing to partner. One bank head told him plainly: “We don’t want consumerism in Pakistan.” Another confessed banks prefer T-bills. Why risk a 50,000-rupee loan to a rickshaw driver when the government guarantees returns. Lakhani’s counter is sharp. When a bank lends 6 crore to a textile owner for a luxury car, no one calls it consumerism. Lend 50,000 to a doorman for a refrigerator and the same banker balks. The math is absurd but revealing. Banks are incentive-misaligned. Kist Bazaar is built for this segment and only this segment.

Funding discipline in a hype cycle

The period 2021 to 2023 saw startup FOMO. Lakhani entered in November 2021, when interest rates hit 18 percent and funding dried up simultaneously. Bad timing by most measures. But he kept the company EBITDA-positive from day one. Three rounds: 500,000 dollars in seed, 3.2 million in Series A, and a Series B led by Indus Valley Capital with participation from Kayser Yunus of Applied Intuition. Total raised: 3.7 million dollars. Total disbursed: 8 billion rupees. “You can imagine how that’s done,” Lakhani says with evident pride. The working capital is the book itself. Equity stays two-thirds with founders. Employees hold 10 percent. The rest is debt from Alphala and embedded finance, allowing the company to grow without diluting control or abandonment of profitability.

The consumerism trap and the real story

Muzamil raises a fair challenge. Success stories in Pakistan often come via debt and consumerism. Is Kist Bazaar just another engine for rising household leverage. Lakhani’s answer is measured. “Consumerism is not increasing because of us,” he says. Fridge sales are down 30 percent in two years. AC sales are down 25 percent. Mobile sales have plateaued. “We are not increasing consumerism in Pakistan. We are giving them a better, halal option to acquire the same thing.” The average household still needs a bike for transport, a phone for work, a fridge for food storage. Kist Bazaar just removes the humiliation of borrowing from a loan shark who demands a gold bangle as collateral.

The policy opportunity

Lakhani’s time at the Pakistan-China Business Forum in China changed his outlook. He pitched a simple idea to SECP commissioners and government officials: let Pakistani startups hold dollar accounts. Right now, investment comes in but parks in Singapore or Dubai, held against an SBLC. Allow domestic dollar accounts and the same money stays in Pakistan. He estimates this single change could double the flow of foreign investment into Pakistani companies. It is the kind of policy insight that comes from actually building in the market, not from theory.