MICROCAPITAL BRIEF: State Bank of Pakistan (SBP) Prioritizes the Development of the Microfinance Sector

In his opening comments at a conference titled, “Economic Empowerment for the Base of the Pyramid,” Governor Salim Raza of the State Bank of Pakistan (SBP) recently emphasized the critical role of microfinance banks (MFBs) in the creation of economic opportunities for the underserved segments of the population.  SBP has made the development of the nation’s microfinance sector a strategic priority by taking comprehensive measures to remove regulatory bottlenecks for MFBs, such as the recent development of prudential regulations that provide guidance and oversight for MFBs to develop sources of public funding from public depositors, international financial institutions and private investors.  SBP has recently relaxed the criteria for borrowers as well as increased the ceiling on lending limits to PKR 150,000 (USD 1,780) for general purpose loans and PKR 500,000 (USD 5,934) for housing loans.  Earlier this year, SBP launched the Microfinance Credit Guarantee Facility (MFCG), which is worth GBP 10 million (USD 16.2 million) as a source of funds for microfinance banks and microfinance institutions.  In order to reduce the risks associated with microfinance operations and increase investor confidence in the sector, SBP plans to establish a microfinance exclusive credit information bureau.

About State Bank of Pakistan (SBP):
Established in 1956, the State Bank of Pakistan (SBP) is the nation’s central banking authority. SBP performs several primary functions: to regulate and supervise the nation’s financial system, to conduct monetary policy, and to manage public debt. In addition, SBS perfoms non-traditional functions: to develop the financial framework of the country, to provide credit to priority sectors and to help in the Islamization of the banking system. SBP website: http://www.sbp.org.pk/
 
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