State Bank of Pakistan (SBP) Governor Dr Ishrat Husain has advocated the promotion of micro-finance institutions (MFIs) to help poorest of the poor in the country He was talking to the participants after inaugurating a three-day workshop on "Micro-finance Regulation and Supervision" at the Institute of Bankers Pakistan here on Wednesday.
The workshop is organised by the SBP and continues to November 18, 2005. The officers of the SBP, representatives from micro-finance banks, NGOs and MFIs, apex institution, and MFIs Network are attending the workshop.
Dr Ishrat Husain expressed his surprise at the superficial attitude of the financial community towards micro-financing. "Micro-finance is normally regarded as an outsider", he commented.
"The appropriate and poor-friendly products in micro-finance with solvency and transparency should be designed to help the most deprived section of our society", he said, adding the need of solvency requires regulatory body and the SBP comes in here to assume that role.
It may be recalled that the SBP, under the MFIs Ordinance, 2001, has been entrusted with the responsibility of licensing, regulation and supervision of the micro-finance banks.
The SBP governor also said the micro-finance system in the country should be given sustainability in order to allow its working as a poor man''s bank. It would need asset creation and deposit mobilisation to put this system on solid foundations.
The poor had to be educated to save some of their income otherwise the idea of the MFIs would not click to its full potential. He admitted that MFIs were relatively new phenomenon in Pakistan, saying: "But we are in the process of learning and hopefully we will lean fast."
Dr Ishrat Hussain reminded the participants about the adage "curiosity is basis of learning" and advised them not to hesitate in asking questions during the three-day workshop.
He said that 25 officers were working in the MFIs pool of the SBP and they would be trained to acquire more knowledge in the field, adding the central bank has arranged a comprehensive training programme for them.
The SBP governor said that some NGOs were working as MFIs but they were not regulated. He asked the participants to decide, through consensus in the workshop, about the possibility of bringing activities of these NGOs under regulation of the central bank. He thought that many pertinent questions should be asked by the participants to clear the haze surrounding the MFIs.
Dr Ishrat Hussain warned the vulnerability of the consumers of the micro-finance who were poor and illiterate and prone to be victims of the crooks. The lending process to the poor might be abused as the borrowers would be from the lowest strata of society and not in a position to know and use their rights. He hoped that social intermediaries should be involved to defend the rights of such people.
Richard Rosenberg, Senior Adviser, Consultative Group to Assist the Poor (CGAP), the multi-donor micro-finance consortium housed at the World Bank, Washington DC, conducted the workshop. Rosenberg has been involved with the MFIs since 1984 and is an expert in appraisal, funding, technical assistance and teaching.
Earlier, Saleem Umar, CEO, Institute of Bankers Pakistan (IBP), thanked the SBP governor and Richard Rosenberg, and hoped the workshop would help the participants understand the micro-finance system and apply it successfully in their professional career.
Umar said that the nation was facing the macro-issues of poverty and lack of entrepreneurs and micr-finance could help in tapering this problem. "Recent earthquakes in Pakistan has multiplied the problems of the poor in the affected areas and micro-financing is the answer to the problem", he added.
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