The State Bank of Pakistan (SBP) has eased requirements on the cash reserve requirement (CRR) of microfinance institutions (MFIs), exempting deposits of one year and longer. Also, time liabilities of one year and longer have been exempted for the maintenance of the statutory liquidity requirement (SLR). SBP has made these amendments with the intention of encouraging MFIs to seek out long-term deposits and be better able to use their financial resources for onward lending.
Banks will now be required to maintain a CRR of not less than five percent of its deposits that have a term of less than one year, and time deposits that are one year and over will no longer require any cash reserve. Banks will also now be required to maintain SLR equivalent to at least 10 percent of its total demand liabilities and time liabilities with a length of less than one year. Time liabilities, liabilities that are payable other than on demand, of one year and over will not require any SLR.
By: Christine Chang, Research Associate
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 performs 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.
Additional Resources:
The News website: SBP facilitates microfinance banks, May 14, 2010: http://www.thenews.com.pk/print1.asp?id=239012
MicroCapital Universe: State Bank of Pakistan (SBP): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=State+Bank+of+Pakistan+%28SBP%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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