KARACHI: The State Bank of Pakistan on Saturday released revised prudential regulations for microfinance banks (MFBs) to streamline the requirement to obtain a credit information report (CIR) and simplify the process of documentation for borrowers.
The central bank, in a statement, earlier said that the Credit Bureaus Act (CBA) 2015 was enacted to provide a basis for the incorporation and operation of credit bureaus in Pakistan. “Under the CBA, Approved Credit Bureaus (LCBs) offer a comprehensive CIR to financial institutions on individuals and borrowers to make informed decisions, borrower creditworthiness, and debt load capacity.”
In view of the changing LCB landscape, the SBP has made some changes to the MFB regulations, he added.
“Previously, MFBs were required to obtain a written statement from borrowers regarding the facilities they had already obtained from other financial institutions.
However, as LCBs are able to offer a full CIR to individuals / borrowers, in order to avoid duplication, this requirement has been removed, â€the SBP said.
“This would improve efficiency and further simplify the loan approval process by reducing the
borrower requirements, â€he added.
Likewise, the central bank said, MFBs were previously required to obtain a mandatory SBP eCIB credit report for all credit facilities over Rs 30,000.
“As LCBs are able to offer a full CIR to its members, which constitute almost all banks, MFBs and non-bank microfinance companies; therefore, the mandatory requirement to inquire with SBP’s eCIB has been withdrawn, â€the SBP statement read.
This revision, he added, would allow MFBs to decide independently whether to obtain CIR from borrowers, regardless of the size of the loan.
“In addition, the obligation of MFBs to report to SBP’s eCIB has also been simplified in addition to aligning relevant terminologies with the 2015 Credit Bureaus Act,†the central bank said.
