Microfinance has been successfully used all over the world for poverty alleviation. In order to use it effectively in Pakistan, a comprehensive Microfinance Strategy was developed which envisaged increasing the number of borrowers of MFBs & MFIs to 3 million by end of 2010. To achieve the strategy objectives, microfinance industry would require additional funding. Therefore, it has been decided to introduce Pakistan Microfinance Credit Guarantee Facility (“MCGF”) to facilitate and promote channelization of funds from banks/DFIs to MFBs/MFIs. The MCGF will provide Partial Guarantee, which will not only reduce the credit risk of the participating banks/DFIs but will also help in enhancing the outreach of the microfinance to poor and marginalized segment of the society. Details of the facility are attached.
The banks/DFIs are encouraged to develop a strategy for increasing lending to microfinance sector, particularly for providing financing facilities to the MFBs/MFIs under the MCGF guidelines.
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