The State Bank of Pakistan (SBP) Monday allowed direct membership of cheque clearing house to Microfinance Banks (MFBs) aimed at avoiding inordinate delays in the transfer of funds. However, for this membership, all MFBs will be required to maintain adequate funds/liquidity in their current accounts with SBP BSC (Bank), Karachi, based on their existing and future clearing requirements. While, in case any MFB is unable to settle their clearing obligations within thirty (30) minutes time, SBP may take penal action including levying penalties under the applicable laws.
According to PSD Circular No 02 of 2015 issued on October 12, 2015, in exercise of the powers conferred upon the State Bank of Pakistan under Payment Systems & Electronic Funds Transfer Act, 2007, it has been decided to allow direct membership of cheque clearing house to Microfinance Banks (MFBs) without acquiring membership of Pakistan Real-time Interbank Settlement Mechanism (PRISM) system, subject to some conditions.
For direct membership, MFBs will enter into comprehensive Service Level Agreements (SLAs) with the clearing house for this purpose and the clearing house will prepare separate clearing batches of instruments drawn on and presented by MFBs and provide the same to PRISM for settlement on Multilateral Net Settlement basis. However, PRISM membership will not be mandatory for MFBs.
All MFBs are required to maintain adequate funds/liquidity in their current accounts with SBP BSC (Bank), Karachi, based on their existing and future clearing requirements and MFBs will constantly monitor and replenish funds in their current accounts to mitigate the liquidity/settlement risk.
Further, the circular said MFBs are required to establish Funding Arrangements (FA)/Credit Lines (CL) with direct participants of PRISM, enabling direct participants to replenish MFBs settlement account as and when required within stipulated time. Confirmation of this arrangement should be sent to Payment Systems Department (PSD), SBP prior to the commencement of the Separate Clearing Batch Mechanism, the circular said.
However, SBP has warned that, in case any MFB is unable to settle their clearing obligations within thirty (30) minutes time, SBP may take penal action including levying of penalties under applicable laws.
MFBs will provide contact details of their two designated officials for co-ordination with clearing house and SBP within seven (7) days. A detailed mechanism of separate clearing batch processing for Microfinance banks has also been issued by SBP, while this arrangement will be effective from November 15, 2015. The SBP said the membership allowed to MFBs will be a step in the direction of achieving the overall objective of financial inclusion in an integrated and sustained manner. It is expected that the arrangement will significantly reduce the dependence of MFBs on commercial banks. Overall, it will improve the smoothness in payment system and thus contribute towards financial stability, it added.
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