The State Bank of Pakistan (SBP) is reported to be permitting microfinance institutions (MFIs) to accept gold as collateral to secure microfinance loans. International: The News, a Pakistan-based news source, speculates that SBP has changed its stance on the issue in an effort to boost the issuance of loans following the floods that greatly affected Pakistan in 2010. In a circular reportedly issued to all MFIs in the country, SBP stated, “the negative growth [in 2010] was mainly due to the devastating floods during the third quarter of 2010 that gripped most parts of the country…Moreover, an overall difficult macroeconomic environment continues to challenge the credit growth of microfinance players” [1].
By: Alexandra Pattee, Research Associate
About State Bank of Pakistan (SBP): Established in 1956, the State Bank of Pakistan (SBP) is the nation’s central banking authority. SBP is responsible for the following primary functions: to regulate and supervise the nation’s financial system, to carry out monetary policy and to manage public debt. In addition, SBP performs the following non-traditional functions: developing the financial framework of the country, providing credit to priority sectors and furthering the Islamization of the banking system.
Sources and Resources:
[1] International: The News, “Microfinance banks allowed treating gold as collateral”, http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=50819&Cat=3&dt=6/5/2011
MicroCapital.org Article, March 21, 2011, “State Bank of Pakistan (SBP) Announces Launch of $16m Financial Innovation Fund, Support for Mainstreaming Microfinance into Formal Banking System”, https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-sbp-announces-launch-of-16m-financial-innovation-fund-support-for-mainstreaming-microfinance-into-formal-banking-system/
MicroCapital.org Article, December 3, 2010, “State Bank of Pakistan (SBP) Increases Minimum Capital Requirement for Microfinance Banks”, https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-sbp-increases-minimum-capital-requirement-for-microfinance-banks/
MicroCapital.org Article, November 17, 2010, “State Bank of Pakistan (SBP) Aims to Ensure Sustainable Development of Microfinance Industry”, https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-sbp-aims-to-ensure-sustainable-development-of-microfinance-industry/
MicroCapital.org Article November 4, 2010, “State Bank of Pakistan (SBP) Launches $116m Concessional Financing Scheme Through Development Finance Institutions in Flood-Affected Areas, Advises Microfinance Banks to Reschedule Loans”, https://www.microcapital.org/microcapital-brief-state-bank-of-pakistan-sbp-launches-116m-concessional-financing-scheme-through-development-finance-institutions-in-flood-affected-areas-advises-microfinance-banks-to-reschedule/
MicroCapital’s Microfinance Universe profile: State Bank of Pakistan (SBP), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=State+Bank+of+Pakistan+(SBP)
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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