KARACHI : With a view to facilitating banks and DFIs lending to Microfinance Banks/NGO Microfinance Institutions (MFBs/MFIs) for broadening outreach of microfinance, the State Bank has simplified the procedure for issuance and payment of claims under the Microfinance Credit Guarantee Facility (MCGF) in consultations with banks/DFIs.
The SBP has advised banks/DFIs to finalise their wholesale lending deals with MFBs/MFIs and submit their cases to SBP Banking Services Corporation (BSC) for issuance of subject guarantee as per procedure envisaged in the guidelines. Keeping in view the important role of microfinance in developing countries, the SBP has been encouraging banks/Development Finance Institutions (DFIs) to provide funding to viable Microfinance Banks (MFBs)/NGO Microfinance Institutions (MFIs), to enable them to achieve the outreach targets.The bank said that it has been observed that apart from few instances, where funds have been provided to a few MFBs/MFIs, the commercial banks have yet to explore the local currency lending opportunities with MFBs/MFIs. In order to incentivize the channelling of funds to the microfinance sector, the SBP has designed a Microfinance Credit Guarantee Facility (MCGF), henceforth referred to as the facility which will be administered by the SBP, BSC. The facility is expected to facilitate banks/DFIs to play a leading role in easing credit constraints of MFBs/MFIs in their efforts to maximise outreach by extending credit facilities to them.
Courtesy: Business Recorder
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