With a view to streamline the procedure for finalization of inspection reports and process of appeals against penalties imposed on irregularities/violations of laws/regulations/circulars pointed out in the inspection reports, Microfinance Banks (MFBs) are advised as under:

i. Provide timely information/evidence/record demanded by inspection team in connection with any irregularity/observation noted in the draft inspection report. SBP will not consider any evidence presented by the MFB to contest an observation in the final meeting held at SBP to finalize the inspection report if it is found that the MFB had deliberately and/or negligently withheld such evidence at any stage during inspection process.

ii. An appeal may only be made to Offsite Supervision & Enforcement Department (OSED) against penalty imposed on specific instances/annexure/appendices where the MFB can substantiate its claim with sufficient documentary evidence. Any record/evidence produced before OSED to support the appeal, which was not presented earlier to BID during the inspection process, shall not be entertained.

iii. Any request for refund of penalty should be filed with OSED within maximum 120 days after the date of realization of penalty amount by SBP. Any appeal filed subsequently will be deemed time barred thus shall not be considered.

iv. An appeal for refund of penalty against a specific penalty advice can only be made once.

v. The MFB filing the appeal will need to pay a fee equivalent to 5% of the amount contested or a minimum of Rs. 100,000/- whichever is higher as processing fee for the appeal so made. The processing fee will be payable upfront by the MFB making a request for refund of penalty through RTGS to SBP’s Account No. 427514 “Payable Penalty Refund Processing Fee”. The MFB must mention the RTGS transaction reference in its appeal letter addressed to the Director, OSED. The MFB should write the following standard message while making payment “Processing fee for penalty refund on XYZ MFB’s IR as of (date format DD: MM: YY)”. Further, MFBs which are not the direct participants of the RTGS may either make the payment through a direct participant (preferably) or by a pay order in favor of SBP. If any amount of penalty contested is found tenable, the processing fee will be refunded with the amount of refund so determined to the concerned MFB.

Please acknowledge receipt.