The Presidents / Chief Executive Officers
All Microfinance Banks

Dear Sir,

PRUDENTIAL REGULATIONS FOR MICROFINANCE BANKS
REVISION IN PR – 10 & PR - 11

This refers to Prudential Regulations No. 10 & 11 for Microfinance Banks as amended from time to time.

With a view to improve access to finance for microenterprises, it has been decided to amend Prudential Regulations No. 10 & 11 to allow MFBs to lend to microenterprises any amount upto Rs. 500,000/- subject to the following conditions:

1. For the purpose of these regulations, the term ‘microenterprise’ shall mean projects or businesses in trading/manufacturing/services/agriculture sectors that lead to livelihood improvement and income generation. Moreover, these projects/businesses are undertaken by micro-entrepreneurs who are either self-employed or employ few individuals not exceeding 10 (excluding seasonal labor).
2. MFBs shall restrict their exposure under microenterprise lending at maximum 40% of their gross loan portfolio.
3. The aggregate exposure of a borrower who is eligible to avail both general and micro-enterprise loan shall not exceed Rs. 500,000/-

MFBs shall apply to Director-AC&MFD for seeking approval of SBP before undertaking ‘microenterprise’ lending. SBP shall grant approval based on satisfactory assessment of the Capital position and readiness level of the applicant MFB.
In addition to the above, MFBs shall henceforth obtain CIB reports for all types of credit facilities on mandatory basis.
MFBs shall ensure meticulous compliance of the above instructions and non-compliance shall be dealt with in accordance with the provisions of the Microfinance Institutions Ordinance, 2001.

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