SBP allows MFBs to extend Rs0.5mn lending

RECORDER REPORT

KARACHI: The State Bank of Pakistan (SBP) has decided to allow Microfinance Banks (MFBs) to lend micro-enterprises any amount up to Rs500,000.

This decision of SBP will help address the credit needs of a large micro-enterprise market which has traditionally remained unbanked, and will also provide an opportunity to microfinance banks to upscale their credit operations. Earlier, MFBs were allowed to lend up to Rs150,000 for general purpose loans to individuals.

With a view to improving access to finance for micro-enterprises the State Bank has amended Prudential Regulations 10 & 11 for Microfinance Banks (MFBs) pertaining to "Maximum Loan Size, and Disclosure of Basic Terms & Conditions of Financial Products," and "Maximum Exposure of a borrower from MFBs/MFIs/other Financial Institutions/NGOs."