The Presidents/ CEOs

All Microfinance Banks

Dear Sir(s),

Revised Prudential Regulations for Microfinance Banks (MFBs)

It has been decided to revise the Prudential Regulations (PRs) for Microfinance Banks in view of the changing dynamics of the microfinance sector in Pakistan. These revisions have been made after carrying out a holistic review of existing regulatory framework and to promote sustainable growth of microfinance in the country.

2. The revised Prudential Regulations are structured into four main categories; Governance (G), Operations/Consumer Protection (O), Anti Money Laundering- AML/ Combating Financing to Terrorism- CFT (M), and Risk (R). Furthermore, various instructions and directives issued by SBP from time to time have also been consolidated with PRs for consistency and convenience. Certain instructions in the existing PRs for MFBs have been removed as these are already covered under Microfinance Institutions (MFI) Ordinance 2001 and shall therefore remain binding on MFBs.
3. These regulations are being issued in exercise of the powers conferred under Section 22 of the MFI Ordinance 2001. Any non-compliance or circumvention will attract penal actions. The revised Prudential Regulations do not supersede directives and instructions issued by SBP in the matters not covered under these regulations.
4. The revised Prudential Regulations for MFBs shall come into force with immediate effect except where specifically mentioned otherwise.
5. Please acknowledge receipt..

Encl: Revised Prudential Regulations for MFBs.