Paper

Pakistan: Criteria and Conditions for Grant of Licence for Establishing Microfinance Banks/Institutions

Regulation and supervision of microfinance banks/microfinance institutions in Pakistan
Download 9 pages

This Directive states that the microfinance banks/ microfinance institutions (MFB/ MFI) shall be companies public or private incorporated in Pakistan under Companies Ordinance 1984. The Directive:

  • Specifies the minimum paid-up capital and that 51% should be subscribed by the promoters;
  • Stipulates the provisions regarding the following for Sponsor Director:
    • Minimum number;
    • Net worth;
    • Commitment letters;
    • Provisions for disqualification.

The Decree proceeds by stating that:

  • No person can be on the board of more than one MFB/MFI;
  • Chief Executive should be a professional with sufficient experience;
  • MFI must commence operation within six months of the grant of license by the State Bank of Pakistan (SBP);
  • Applicant should submit requisite documents;
  • Applicant should deposit a pay order or demand draft of Rs.500,000.

The Law also makes it mandatory for the MFB/MFI, which may be permitted to be established, to comply with:

  • Provision of Microfinance Institution Ordinance 2001;
  •  Rules regulations framed under it;
  • SBP directives to be issued from time to time.

Finally, the Law concludes by stating that a MFB/MFI may be established by applying to the Director.

About this Publication

Published