KARACHI: Microfinance sector has witnessed remarkable growth in the past few years which can be attributed to the visionary leadership and ownership at the highest level at the State Bank of Pakistan (SBP). This was stated by Deputy Governor State Bank of Pakistan, Saeed Ahmad while speaking at the launching ceremony of Microfinance Corporate Governance Training Program at a local hotel, said a SBP statement on Tuesday.
He reminded that the journey started in the year 2000 to promote access to finance by creating a new class of banks dedicated to provision of financial services to the poor and low-income segments of our society. He said the same vision has been consistently pursued by successive leadership at SBP.
The legal and regulatory framework of Pakistani microfinance was built on the strong foundations and strategic direction by State Bank's leadership which is internationally acclaimed today. He said that building on this strong leadership legacy, the current SBP leadership was deeply committed to take the agenda of access to finance to the next level.
The strengthening of governance structures of microfinance providers was critical to achieving scale and institutional development by addressing key challenges. The sector had become complex and diversified, seeing new types of players such as telecom companies, insurance companies and commercial banks entering the market, he said.
Deputy Governor said the landscape in terms of funding for the sector was also changing and the ability of institutions to access commercial funds was increasingly gaining importance. He said the core objectives of a strong corporate governance structure should be on enhancing transparency; increasing oversight and strengthening controls while achieving sustainability and growth for greater financial inclusion.
He said that in promoting sound corporate governance practices and fair competition in the microfinance sector, SBP had taken major policy steps. These include strengthening legal framework for microfinance by effecting appropriate amendments , fixing responsibility of Board of Directors for oversight of strategy and operations, SBP's prior approval which is required for CEO/Directors under fit and proper criteria, specialized supervision system for MFBs including Annual Onsite examination and Quarterly offsite surveillance enforcement mechanism. He said that despite all these measures, a strong governance system could not be built if ownership was lacking on part of investors or management.
Therefore, the corporate governance training program has been launched today by SBP in collaboration with the microfinance industry and Hikmah Consulting under umbrella of Financial Inclusion Program (FIP) with the funding assistance of the UK Aid. He concluded by saying that SBP would continue to play its strategic role for the development of the microfinance sector in Pakistan.
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