SBP to launch pilot Microfinance CIB

KARACHI: The State Bank has announced it will launch a pilot Microfinance-Credit Information Bureau (MF-CIB) on May 21 in Lahore.

The MF-CIB, a joint venture between the Pakistan Microfinance Network (PMN), the UK’s Department for International Development (DFID), the Citi-Foundation and the State Bank, would be a landmark achievement for the microfinance sector, the SBP claimed in a press release on Wednesday. Globally, it said, the initiative was being viewed as a unique public-private partnership model in which the State Bank, the PMN and its members (association and industry players) would be working together to build synergies and provide much-needed services for the microfinance industry.

The MF-CIB would also improve risk management practices and reduce over-indebtedness of low-income clients, it said. Initially, the pilot credit bureau will contain data only from the 11 microfinance providers (MFPs) working in Lahore district. These players comprise three microfinance banks (MFBs), five microfinance institutions (MFIs), two rural support programmes and one commercial finance institution. The CIB will report the “negative” (defaulters) list supplied by these organisations.

It will serve as a centralised database to store all past and present credit transactions of an individual who has been declared a defaulter. Currently, microfinance banks, regulated by the State Bank, have access to the SBP’s e-CIB, but a large number of microfinance clients, approximately 50 per cent, were served by non-regulated MFIs with no credit history of their customers either at the SBP or a private CIB. In recent years, microfinance outreach in Pakistan has grown rapidly. Total number of microfinance borrowers as of December 2009 stood at 1.83 million as compared to only 330,000 in December 2003.

Published in the Express Tribune, May 20th, 2010.