Microfinance
is an important area for broadening and deepening of financial
services particularly to poor and low income people. Pakistan
is one of the few countries in the world, which has a
separate legal and regulatory framework for Microfinance
Banks. The framework allows MFBs to extend range of microfinance
services including savings and payment transfer facilities
to the marginalized people and their micro enterprises.
In
this regard, to facilitate the downscaling financial services
of the commercial banks, State Bank has prepared guidelines
for them to provide Microfinance services under four different
modes which include, i) establishment of MF counters in
the existing branches, ii) designating stand alone MF
branches either through conversion of existing branches
or opening new MF branches, iii) establishing independent
MF subsidiary with independent and professional board
and management under MFIs Ordinance 2001 and iv) developing
linkages with MFBs licensed by SBP and NGO-MFIs that are
not licensed by SBP to extend wholesale funds for onward
lending.
Each
mode has its merits which have been discussed in the guidelines.
The commercial banks interested in building MF portfolio
should review the different institutional/organizational
arrangements and select, one or the combination of more
than one mode, based on their organization structure,
capacity and overall objectives.
The
MF operations of commercial banks through MF Counters
at conventional branches, Standalone MF branches and wholesale
funds to NGO-MFIs will be subject to Prudential Regulations
issued separately under Banking Companies Ordinance 1962
for commercial banks undertaking microfinance. However,
MF operations through establishment of independent MF
subsidiary, with independent and professional board and
management, will be governed under MFIs Ordinance 2001
and Prudential Regulations applicable on Micro Finance
Banks. The guidelines for undertaking microfinance services
are given at annexure A.
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acknowledge receipt.