Please refer to BSD Circular No. 18 dated October 14, 2002 regarding Prudential Regulations for Micro Finance Banks (MFBs).

2. As you are aware Microfinance Banking in Pakistan has witnessed a considerable growth in recent years. However, keeping in view the existing large unmet demand in Microfinance sector and the need for strengthening institutional capacities of MFBs, certain changes in the existing legal & Regulatory framework have been made.  It may be noted that some amendments have already been made in MFIs Ordinance 2001 through Finance Bill 2006..

3. The current changes in Prudential Regulations for MFBs mainly relate to increase in maximum loan size, investment of surplus fund, minimum income threshold, submission of audited financial statements, and declaration of Fidelity and Secrecy.  The revised Prudential Regulations for MFBs are enclosed which will come into force with immediate effect.

4. Three of the existing SBP Circulars viz. BSD Circular No. 18 dated October 14, 2002, BSD Circular N0. 2 dated 28-03-2005, and SMED Circular No. 7 dated 13-04-2006, will be superseded by the revised Prudential Regulations for MFBs.

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