Paper
Pakistan: Prudential Regulations for Microfinance Banks/Institutions
Regulatory framework for microfinance banks/institutions licensed by the State Bank of Pakistan
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12 pages
This is a set of regulations applicable to all microfinance banks (MFBs)/ microfinance institutions (MFIs) licensed by the State Bank of Pakistan. The Directive details the provisions concerning:
- Minimum capital requirement;
- Exposure against contingent liabilities;
- Percentage of maintenance of cash reserve and liquidity;
- Statutory reserve and depositors' protection fund.
Further, the Law lists provisions relevant for MFBs/MFIs for the following:
- Classification of assets and provisioning requirements;
- Rescheduling/ restructuring of loans;
- Writing-off non-performing loans;
- Pricing policies of microfinance products and services.
The decree imposes certain restrictions on the following activities:
- Criminal use of MFI/ MFB channels for the purposes of money laundering and other unlawful trade;
- Undertaking of cash payments outside the MFI's/MFB's authorized place of business;
- Removal of records and documents.
Finally, the Act specifies requirements relating to:
- Cash payments, accounts and audit;
- Submission of statistical returns.
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