Revising the Minimum Capital Requirement (MCR) for microfinance banks (MFBs), the State Bank of Pakistan has allowed the existing MFBs to raise their minimum paid-up capital, in a phased manner, during the next three years.
According to Circular (BSD Circular No 7, issued on Friday, the MFBs shall maintain a minimum paid-up capital (free of losses) of not less than Rs 300 million if licensed to operate in a specified district, instead of Rs 100 million fixed earlier.
MCR has been fixed at Rs 400 million if licensed to operate in a specified region, instead of Rs 150 million prescribed earlier. Similarly, MFBs will be required to maintain Rs 500 million if licensed to operate in a specified province, instead of Rs 250 million fixed earlier; and Rs 1 billion MCR has fixed if licensed to operate at national level, instead of Rs 500 million prescribed earlier.
Sources in banking sector said that this step of SBP would ensure that only such sponsors would venture to establish MFBs who have adequate financial resources to meet the present and future capital requirements. Moreover, the MFBs need increased share capital to meet the growing demand for investments in technology-intensive infrastructure and information systems. It may be recalled that previous MCR for MFBs were set in 2001.
The Circular further said that MFBs, which do not meet the above-mentioned revised MCR, MFB licensed to operate at national level are required to enhance their (free of losses) paid-up capital Rs 600 million as on December 31, 2010, Rs 800 million end of calendar year 2012 and Rs one billion as on December 31, 2013.
In addition, MFBs licensed to operate at district level are also required to enhance Minimum Paid up capital (free of losses) required as of December 31, 2010 at Rs 200 million, Rs 250 million December 31, 2012 and Rs 300 million as on December 31, 2013. The State Bank has revised the MCR for MFBs in exercise of powers vested under Section 10 of the Microfinance Institutions Ordinance 2001, the Circular added.
It may be pointed out that seven microfinance banks with branch network of 289 are operating in the country. These include five nation-wide microfinance banks viz Khushali Bank, The First Microfinance Bank, Tameer Microfinance Bank, Pak Oman Microfinance Bank & Kashf Microfinance Bank and two district wide Microfinance Banks viz. Rozgar Microfinance Bank & Network Microfinance Bank.