Key Conditions For Microfinance Bank Loans Withdrawn

Web Desk — In order to facilitate small borrowers the State Bank of Pakistan (SBP) removed written declarations and credit information reports as requirements for obtaining loans from microfinance banks (MFBs).

The SBP has introduced changes to microfinance regulatory regulations to streamline the process of obtaining Credit Information Reports (CIRs) and simplify the documentation requirements for microfinance borrowers.

It is intended to enhance the role of MFBs in accelerating economic activities and enhancing the opportunities for small borrowers. Previously, MFBs were required to obtain written declarations from borrowers about facilities they already obtained from other financial institutions.

“However, as Licensed Credit Bureaus (LCBs) can provide comprehensive credit information on individuals/borrowers, this requirement has been withdrawn to avoid duplication,” the SBP said. “This would make loan approval more efficient and simplify the process by reducing the documentation requirements for borrowers.”

According to both the SBP and the government, MFBs could contribute to eradicating unemployment and poverty by providing attractive microfinance packages that increase employment and income. As a result, this sector may help stimulate the growth of the economy, empower women, increase the volume of funds and facilitate accessibility.