The State Bank of Pakistan (SBP) has increased the minimum capital requirements for microfinance banks in Pakistan in an effort to ensure that microfinance banks have adequate financial resources to remain sound over the long term.
SBP has increased the minimum capital requirements from PKR 100 million to PKR 300 million (USD 1.17 million to USD 3.5 million) for district banks, from PKR 150 million to PKR 400 million (USD 1.75 million to USD 4.67 million) for regional banks, from PKR 250 million to PKR 500 million (USD 2.92 million to USD 5.83 million) for provincial banks and from PKR 500 million to PKR 1 billion (USD 5.83 million to USD 11.7 million) for national banks.
Microfinance banks operating on the national level that do not meet the revised minimum capital requirements are required to enhance their paid-up capital (free of losses) to PKR 600 million (USD 7 million) by year-end 2011, PKR 800 million (USD 9.33 million) by year-end 2012 and PKR 1 billion (USD 11.7 million) by year-end 2013.
Similarly, microfinance banks operating on the district level that do not meet the revised minimum capital requirements are required to enhance their paid-up capital (free of losses) to PKR 200 million (USD 2.33 million) by year-end 2011, PKR 250 million (USD 2.92 million) by year-end 2012 and PKR 300 million (USD 3.5 million) by year-end 2013.
No transitional steps are available to regional or provincial banks according to SBP’s recent circular regarding the minimum capital requirement increases [1,2].
By John Howard-Smith, 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 performs several primary functions: to regulate and supervise the nation’s financial system, to conduct monetary policy and to manage public debt. In addition, SBP performs non-traditional functions: to develop the financial framework of the country, to provide credit to priority sectors and to help in the Islamization of the banking system.
[1] The Nation: “SBP increases MCR for Microfinance Banks”, http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/27-Nov-2010/SBP-increases-MCR-for-Microfinance-Banks
[2] State Bank of Pakistan BSD Circular: “Prudential Regulation No.4: Minimum Capital Requirements (MCR)”, http://www.sbp.org.pk/bsrvd/2010/C7.htm
MicroCapital.org story, November 17, 2010: “MICROCAPITAL BRIEF: 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/#more-8190
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/
Similar Posts:
- MICROCAPITAL BRIEF: HugoBank, KT, Mashreq, Raqami Islamic, Telenor Microfinance Earn Regulatory Approval to Pilot Digital Banking Services in Pakistan
- SPECIAL REPORT: The Business Case for Education Finance #EMW2023
- MICROFINANCE PAPER WRAP-UP: “Land Titling and Microcredit in Cambodia: Examining the Reality of Hernando de Soto’s ‘Three Steps to Heaven,’” by Milford Bateman
- MICROCAPITAL BRIEF: Elm of Saudi Arabia Partners with IrisGuard to Bring Biometric Identification to Government-to-person (G2P) Payments in Africa, Asia
- SPECIAL REPORT: The Impact of Digital Financial Inclusion on Global Development
