Circulars/Notifications -  
 AC&MFD Circular No. 02 0f 2015
June 18, 2015 


The Presidents/Chief Executive Officers
All Microfinance Banks

Dear Sirs /Madam,

Amendment in Prudential Regulation R-5 for Microfinance Banks (MFBs)

      Please refer to Regulation R-5 relating to ‘Maximum Loan Size and Eligibility of Borrowers’ for MFBs.

2. It has been decided that the aggregate loan exposure of a microfinance bank against the security of gold shall not exceed 35% of its gross loan portfolio. The MFBs having existing gold backed loans portfolio of more than 35% shall submit a plan within 30 days to SBP for obtaining approval to comply with the instructions within a maximum period of 2 years. Further, MFBs shall ensure to have in place appropriate mechanism for monitoring their aggregate exposure limits on gold backed lending.

3. MFBs shall also develop a collateral handling policy duly approved by their Board of Directors to manage security, procedures, and contingency planning for the gold collateral. While formulating policy on gold collateral handling, MFBs shall take into account regulatory prescribed minimum instructions given in Annexure–I.

4. The above amendments are applicable to all microfinance banks with immediate effect.

5. All other instructions on the subject shall remain unchanged.

     Please acknowledge receipt.

Yours faithfully,


(Kamran Akram Bakhshi)
Additional Director

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