KARACHI: State Bank of Pakistan on Saturday issued revised prudential regulations for microfinance banks (MFBs) to streamline requirement of obtaining credit information report (CIR), and simplifying documentation process for borrowers.
The central bank in a statement said earlier, Credit Bureau Act (CBA) 2015 was promulgated to provide a basis for incorporation and functioning of credit bureaus in Pakistan. “Under the CBA, licensed credit bureaus (LCBs) are offering comprehensive CIR to financial institutions on individuals and borrowers to make informed decisions, borrowers’ credit worthiness and debt carrying capacity.”
Considering the development in the LCB landscape, the SBP had made some amendments in the MFBs’ regulations, it added.
“Earlier, MFBs were required to obtain written declaration from borrowers about facilities already obtained by them from other financial institutions.
However, as LCBs are able to offer comprehensive CIR on individuals/borrowers, therefore in order to avoid duplication, this requirement has been withdrawn,” the SBP said.
“This would bring efficiency and further simplify the loan approval process by reducing documentary
requirements from borrowers,” it added.
Similarly, the central bank said, MFBs were earlier required to obtain mandatory credit report from the SBP’s eCIB for all credit facilities exceeding Rs30,000.
“Since LCBs are able to offer comprehensive CIR to its members, which constitutes of almost all banks, MFBs and non-bank microfinance companies; therefore, the mandatory requirement to make inquiry from SBP’s eCIB has been withdrawn,” the SBP statement said.
This revision, it further said, would allow MFBs to independently decide on obtaining CIR of borrowers, regardless of loan size.
“Furthermore, MFBs obligation towards reporting to SBP’s eCIB has also been simplified besides aligning relevant terminologies with the Credit Bureaus Act, 2015,” the central bank said.