Pakistan: Prudential Regulations for Microfinance Banks (MFBs)

This document contains regulations applicable to all Microfinance Banks (MFBs) that the State Bank of Pakistan has licensed. The regulations address the following topics:

• The definition of terms such as "approved securities"?, "equity"?, "exposure"?, etc;
• Minimum capital requirements for an MFB to commence business;
• Extent of exposure to contingent liabilities;
• Maintenance of cash reserves and liquidity;
• Statutory reserves;
• Deposit protection;
• Restrictions on certain types of transactions;
• Maximum loan size and maximum exposure of a borrower;
• Classification of assets and provisioning requirements;
• Investments and other assets;
• Rescheduling and restructuring of loans;
• Pricing of products and services;
• Prevention of the criminal use of MFB channels;
• Removal of records;
• Management;
• Places of business;
• Reconciliation of inter-branch accounts
• Audits;
• Operational policies;
• Criteria for Board members and the Chief Executive;
• Statistical submission requirements;
• Credit ratings.