MICROCAPITAL BRIEF: State Bank of Pakistan (SBP) Allows Microfinance Providers to Accept Funding from Non-Bank Sources

In December 2008, the MCGF was launched by SBP as a “credit enhancement facility to accrue long-term and market-based finance for microfinance institutions” [1]. MCGF began with GBP 10 million (USD 15.6 million) funding support from the UK Department for International Development (DFID) under the GBP 50 million (USD 78.2 million) financial inclusion programme (FIP), which is managed by the SBP [1].

MGCF is intended to help in building links between microborrowers and formal financial institutions. Under the facility, the SBP Banking Services Corporation shall provide Partial Guarantees (pari passu) for loans from Banks and Development Finance Institutions to MFIs. Banks and DFIs will evaluate the prospective recipient MFIs according to their internal due diligence criteria [1, 2].

By Amy Samudre, Research Associate

About State Bank of Pakistan: The State Bank of Pakistan is the central bank of the nation of Pakistan. Its primary functions include “issue of notes, regulation and supervision of the financial system, bankers’ bank, lender of the last resort, banker to Government, and conduct of monetary policy.” Its secondary functions include “management of public debt, management of foreign exchange, and other functions like advising the government on policy matters.

[1] Thenews.com, “SBP allows microfinance providers to mobilise funding from non-bank sources.” http://www.thenews.com.pk/Todays-News-3-115839-SBP-allows-microfinance-providers-to-mobilise-funding-from-non-bank-sources

[2] “State Bank of Pakistan: Microfinance Credit Guarantee Facility (MCGF)” http://www.sbp.org.pk/MFD/PDF/Micro-Facility.pdf

MicroCapital.org story, March 27, 2012, “MICROFINANCE BRIEF: State Bank of Pakistan (SBP)  Regulation Boosts Microfinance Loan Ceiling to $5k.” https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-sbp-regulation-boosts-microfinance-loan-ceiling-to-5k/

MicroCapital.org story, January 2, 2012, “MICROCAPITAL BRIEF: State Bank of Pakistan Releases Five-Year ‘Microfinance Strategic Framework,’ Launches Financial Literacy Programme” https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-releases-five-year-microfinance-strategic-framework-launches-financial-literacy-programme/

MicroCapital.org story, October 3, 2011, “MICROCAPITAL BRIEF: State Bank of Pakistan (SBP) Reduces Provision Requirements for Microfinance Loans” https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-sbp-reduces-provision-requirements-for-microfinance-loans/

MicroCapital.org story, August 22, 2011, “MICROCAPITAL BRIEF: State Bank of Pakistan (SBP) Reports 13% Quarterly Decline in Microfinance Bank Deposits, Slow Recovery After 2010 Floods,” https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-sbp-reports-13-quarterly-decline-in-microfinance-bank-deposits-slow-recovery-after-2010-floods/

MicroCapital.org story, March 21, 2011, “MICROCAPITAL BRIEF: State Bank of Pakistan (SBP) Announces Launch of $16m Financial Innovation Fund, Support for Mainstreaming Microfinance into Formal Banking System,” https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-sbp-announces-launch-of-16m-financial-innovation-fund-support-for-mainstreaming-microfinance-into-formal-banking-system/

MicroCapital Universe Profile: State Bank of Pakistan (SBP), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=State+Bank+of+Pakistan+%28SBP%29

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