ISLAMABAD: The government has decided to set up a $75-million fund at the State Bank of Pakistan for borrowers interested in setting up small businesses, which is also expected to attract people to vote for the ruling Pakistan Muslim League-Nawaz (PML-N) in the upcoming general elections.
With the help of this fund, the rupee equivalent of $75 million will be disbursed to microfinance banks and microfinance institutions, which will, in turn, provide credit lines to eligible small borrowers including micro-entrepreneurs.
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According to an official, Pakistan had launched the National Financial Inclusion Strategy (NFIS) in May 2015 to set a broader vision for achieving universal financial inclusion in the country. The strategy is aimed at providing financial access for 50% of the adult population by 2020.
In order to achieve the targets laid out in the NFIS, the Finance Division had designed the Financial Inclusion and Infrastructure Project under the Public Sector Development Programme (PSDP) and approved by the Executive Committee of National Economic Council (Ecnec) on October 6, 2017.
The project was planned to be financed through a five-year financial intermediary loan of $137 million provided by the World Bank.
The cabinet, in a meeting held on March 21, was briefed that the rupee equivalent of $75 million would be disbursed to microfinance banks and microfinance institutions through a fund to be established at the State Bank.
By utilising this fund, they would provide financing for eligible microfinance borrowers including micro-entrepreneurs. The credit line would partially ease the liquidity constraints currently being faced by the microfinance sector.
The cabinet was told that in terms of Section 17(194) of the State Bank of Pakistan Act 1956, the federal government was empowered to establish the fund for the purposes of this act or for any specified purposes as the federal government may notify in this behalf.
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It was proposed that the fund would be utilised for the provision of credit to microfinance banks and microfinance institutions through the Financial Inclusion and Infrastructure Project.
A summary was submitted to the cabinet for establishing the fund at the central bank. After comprehensive discussions, the cabinet gave approval to the proposal of establishing the fund for microfinance banks and microfinance institutions.
Published in The Express Tribune, April 4th, 2018.
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