The Presidents/Chief Executive Officers

All Microfinance Banks (MFBs)

Dear Sirs/Madams,

Amendments in Prudential Regulations for Microfinance Banks

Please refer to the instructions issued vide AC&MFD Circular No. 03 of 2014 and subsequent revisions vide AC&MFD Circular No. 02 of 2020.

2. It has been decided to make following revisions in the Prudential Regulations for Microfinance Banks:

   a) Regulation R-6: ‘Maximum Exposure of a Borrower from Other Financial Institutions’

The maximum limits of the borrowers’ aggregate exposure shall not exceed Rs. 350,000/- for general loans, Rs. 3,000,000/- for housing loans and microenterprise loans. However, the aggregate exposure of the borrowers who are eligible to avail both general and microenterprise loans shall not exceed Rs. 3,000,000/-.

The MFBs shall develop an internal mechanism to monitor the overall exposure of their borrowers to manage credit risk and minimize the risk of borrowers’ over-indebtedness. At the time of granting facility, MFBs shall ensure that total exposure of their clients does not exceed their total repayment capacity as determined under the criteria laid-out in the MFBs’ credit policy.

b) Regulation R-7: ‘Credit Report Check’

Before allowing any credit facility, the MFBs shall obtain Credit Information Report (CIR) from the licensed Credit Bureaus of which they are a member or from electronic Credit Information Bureau (eCIB) of State Bank of Pakistan.

MFBs shall assign due weightage to the CIRs in addition to their risk management policies and approved criteria while undertaking credit appraisal of the prospective borrower. Credit applications, however, may not be turned down solely on the basis of overdue amount reported in the CIRs.

The MFBs shall also ensure that CIR is not older than two months at the time of sanctioning credit limits.

c) Regulation O-8: ‘Reporting to Electronic Credit Information Bureau (eCIB)-SBP’

MFBs shall:

1. Provide factual and accurate data to SBP on the format prescribed from time to time. The said data /information shall be submitted to SBP on a monthly basis but not later than 10th of every month following the month to which the eCIB data relates.
2. Sign an agreement with SBP on the prescribed format, in order to avail online facility to obtain CIR, the specimen of which can be obtained from concerned SBP department.
3. Submit credit data of their borrowers on the prescribed formats online through their authorized persons.
4. Report in writing to eCIB SBP, the subsequent clearance of overdues/defaults invariably within three working days from the date of such repayment/settlement.
5. Reflect the detail of re-payment/settlement of overdues/defaults made subsequent to the reporting date to eCIB SBP, by way of following notes in the remarks column of the CIR on the basis of a written letter from the concerned MFB confirming that the overdues/defaults amount has been cleared by the borrower on a specific date: “The “MFB’s Name” has subsequently reported clearance of overdues/defaults of Rs.____on____(date).”
   d) Replacement of Words “eCIB Report” and “Credit Worthiness Report”

The words “eCIB Report” and “Credit Worthiness Report” wherever used in PRs for MFBs, shall henceforth be read as “Credit Information Report (CIR).”

3. All other instructions on the subject shall remain unchanged. The MFBs are advised to follow the regulations in letter and spirit. Any deviation or non-compliance of the same shall attract punitive action under relevant provisions of the Microfinance Institutions Ordinance, 2001.
4. Please acknowledge receipt.