MICROCAPITAL BRIEF: State Bank of Pakistan Increases Limits on Microloan Size, Annual Income, Gold Loans to Help Microfinance Institutions, Clients Respond to COVID-19 Pandemic

The State Bank of Pakistan (SBP), that country’s central bank, recently took additional steps to relieve pressure on microborrowers and microbanks caused by the COVID-19 pandemic, including the following: (1) for general-purpose loans, increasing the maximum loan size from PKR 150,000 (USD 900) to PKR 350,000 (USD 2,100), with a loosened annual income cap of PKR 1.2 million (USD 7,000) to qualify; (2) for enterprise and housing loans, increasing the maximum loan size from PKR 1 million (USD 6,000) to PKR 3 million (USD 18,000), with an income cap of PKR 1.5 million (USD 9,000); and (3) increasing to 50 percent the portion of a microbank’s gross loan portfolio that may consist of loans secured by gold.

Additionally, SBP is allowing microborrowers to restructure their loans if they were current on their payments through December 2019, rather than the February 2020 criterion previously required. Customers may also formally agree to restructuring via recorded phone call rather than having to appear in person.

Sources and Additional Resources

The News (Pakistan) article on regulation and COVID-19
https://www.thenews.com.pk/print/698837-state-bank-expands-loan-limits-for-small-borrowers

The News (Pakistan) article on regulation and preventing over-indebtedness
https://www.thenews.com.pk/print/697016-sbp-revises-regulations-for-microfinance-banks

State Bank of Pakistan homepage
http://www.sbp.org.pk

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