The Presidents/CEOs
All Microfinance Banks

Dear Sirs,

Amendments in Prudential Regulation (PR) No. 6 & 27 for Microfinance Banks (MFBs)

In terms of Powers conferred upon State Bank of Pakistan under section 18 of Microfinance Institutions Ordinance – 2001, following amendments have been made in PR No. 6 & 27 to streamline calculations and reporting of Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR) of MFBs.

PR # 6: Maintenance of Cash Reserve & Liquidity

A – Cash Reserve Requirement (CRR)

1. The MFB shall maintain CRR equivalent to not less than 5% of its Deposits (including demand deposits, and time deposits with tenor of less than 1 year).
2. Time deposits with tenor of 1 year and above will not require any cash reserve.

B – Statutory Liquidity Requirement

1. The MFB shall also maintain SLR equivalent to at least 10% of its total Demand liabilities, and Time Liabilities with tenor of less than 1 year.
2. Time liabilities with tenor of 1 year and above will not require any SLR.
3. For SLR calculation, the approved securities mean Treasury Bills and Pakistan Investment Bonds.

PR # 27: Submission of Periodical Returns

MFBs shall henceforth submit their CRR and SLR statements along with bi-weekly (fortnightly) statement of affairs (annexure-D) to Off-Site Supervision & Enforcement Department, State Bank. The format of bi-weekly (fortnightly) statements of CRR and SLR are prescribed at Annexure D1 and D2 respectively.

3. The above instructions will be effective from bi-weekly (fortnightly) due on 28th May, 2010 and onward.
4. All other instructions on the subject shall, however, remain unchanged.

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