Photo: AFP
The State Bank of Pakistan has issued revised regulations for microfinance banks to facilitate the need for obtaining credit information reports and to facilitate the process of documentation for borrowers.
The initiative aims to increase the role of microfinance banks in accelerating economic activity and creating greater opportunities for small borrowers.
According to a central bank statement, earlier microfinance banks were required to obtain a written declaration from lenders about the facilities already available from other financial institutions, but this requirement has been withdrawn to avoid duplication. This is because licensed commercial banks can offer comprehensive CIRs to borrowers.
The SBP said the move would improve efficiency and make the loan approval process easier by reducing the documentation requirements from borrowers.
The notification issued on Saturday said that microfinance banks were earlier required to obtain mandatory credit report from SBP for all credit facilities above Rs 30,000. As licensed commercial banks are now able to offer comprehensive CIRs to their members, comprising almost all banks and companies, the requirement to inquire from the SBP’s Electronic Credit Information Bureau has been withdrawn.
Furthermore, the responsibility of microfinance banks to report to the SBP’s Electronic Credit Information Bureau has been simplified in addition to harmonizing the terms with the Credit Bureau Act 2015.
The Credit Information Report is a report on the performance of past payments as reported by various member banks and financial institutions on an individual, it provides information on instant payments as well as default payments.
