Microfinance banks: SBP increases capital requirement
State Bank of Pakistan (SBP) stresses on adequate financial resources.
KARACHI:
The State Bank of Pakistan (SBP) has revised upwards the minimum capital requirement for microfinance banks (MFBs) in an effort to ensure that only those investors who have adequate financial resources venture into the arena.
In an announcement made on Friday, the State Bank also allowed existing MFBs to raise their minimum paid-up capital in a phased manner over the next three years.
The central bank said that it took the step to ensure that only those sponsors who have adequate financial resources to meet present and future capital requirements proceed to establish MFBs.
Besides, these banks require increased share capital to meet the growing demand for investments in technology-intensive infrastructure and information systems. The previous minimum capital requirements for MFBs were set in 2001.
According to the central bank, the MFBs which are licensed to operate in a specified district will maintain a minimum paid-up capital (free of losses) of Rs300 million compared with the Rs100 million fixed earlier.
In case of MFBs licensed to operate in a region, they will have to maintain a minimum paid-up capital of Rs400 million instead of the previous Rs150 million.
Moreover, MFBs authorised to operate in a province will have to maintain a paid-up capital of Rs500 million compared with the Rs250 million prescribed earlier. The MFBs operating at the national level will have to maintain a paid-up capital of Rs1 billion compared against the previous level of Rs500 million.
Existing MFBs, which do not meet the revised capital limits, will have to enhance their paid-up capital in a transitional arrangement. The MFBs operating at the national level need to enhance their capital to Rs600 million by the end of 2011, Rs800 million by December 2012 and Rs1 billion by the end of December 2013.
District-level MFBs will have to increase the paid-up capital to Rs200 million by end-2011, Rs250 million by December 2012 and Rs300 million by the end of 2013.
The State Bank said it has revised the capital requirements in exercise of the powers vested under Section 10 of the Microfinance Institutions Ordinance 2001.
At present, seven microfinance banks with a branch network of 289 are operating in the country. They include five nationwide microfinance banks namely Khushhali Bank, The First Microfinance Bank, Tameer Microfinance Bank, Pak Oman Microfinance Bank and Kashf Microfinance Bank and two district-level banks: Rozgar Microfinance Bank and Network Microfinance Bank.
Change in capital requirements
Published in The Express Tribune, November 27th, 210.
The State Bank of Pakistan (SBP) has revised upwards the minimum capital requirement for microfinance banks (MFBs) in an effort to ensure that only those investors who have adequate financial resources venture into the arena.
In an announcement made on Friday, the State Bank also allowed existing MFBs to raise their minimum paid-up capital in a phased manner over the next three years.
The central bank said that it took the step to ensure that only those sponsors who have adequate financial resources to meet present and future capital requirements proceed to establish MFBs.
Besides, these banks require increased share capital to meet the growing demand for investments in technology-intensive infrastructure and information systems. The previous minimum capital requirements for MFBs were set in 2001.
According to the central bank, the MFBs which are licensed to operate in a specified district will maintain a minimum paid-up capital (free of losses) of Rs300 million compared with the Rs100 million fixed earlier.
In case of MFBs licensed to operate in a region, they will have to maintain a minimum paid-up capital of Rs400 million instead of the previous Rs150 million.
Moreover, MFBs authorised to operate in a province will have to maintain a paid-up capital of Rs500 million compared with the Rs250 million prescribed earlier. The MFBs operating at the national level will have to maintain a paid-up capital of Rs1 billion compared against the previous level of Rs500 million.
Existing MFBs, which do not meet the revised capital limits, will have to enhance their paid-up capital in a transitional arrangement. The MFBs operating at the national level need to enhance their capital to Rs600 million by the end of 2011, Rs800 million by December 2012 and Rs1 billion by the end of December 2013.
District-level MFBs will have to increase the paid-up capital to Rs200 million by end-2011, Rs250 million by December 2012 and Rs300 million by the end of 2013.
The State Bank said it has revised the capital requirements in exercise of the powers vested under Section 10 of the Microfinance Institutions Ordinance 2001.
At present, seven microfinance banks with a branch network of 289 are operating in the country. They include five nationwide microfinance banks namely Khushhali Bank, The First Microfinance Bank, Tameer Microfinance Bank, Pak Oman Microfinance Bank and Kashf Microfinance Bank and two district-level banks: Rozgar Microfinance Bank and Network Microfinance Bank.
Change in capital requirements
| Scope of activity | New | Old |
| District Region Province National | Rs300 Rs400 Rs500 Rs1,000 | Rs100 Rs150 Rs250 Rs500 |
Published in The Express Tribune, November 27th, 210.