Industry news

Draft Microinsurance RegulationsUnveil

The Securities and Exchange Commission of Pakistan (SECP) and Centre for International Private Enterprise (CIPE) organized a policy round table to lay down possible solutions for overcoming hindrances to microinsurance in the country. The round table resulted in unveiling of Draft SECP Micro Insurance Rules 2011.

" A pilot project for microinsurance will be launched by June this year," Asia Care Insurance CEO Mehdi Kazmi informed the participants. The pilot project will be jointly executed by Asia Care, Allianz-EFU, Adamjee and State Life insurance companies with logistical support from Tameer Bank and First Micro Insurance Agency (FMIA).

.There are currently about four million microinsurance policyholders in Pakistan, majority of who reside in the northern areas. "Previously the size of this market was negligible but with a view of expanding insurance so that it may reach the masses, the regulator is formulating regulations for this segment," explained an SECP official

Source:   http://tribune.com.pk/story/103436/microinsurance-draft-regulations-unveiled/

4th Pakistan Microfinance Forum in Islamabad on 10th November

.Islamabad,4th Pakistan Micro-finance Conference 2010 organized by SHAMROCK Conferences International (www.shamrockconferences.net) will be held on November 10 at the Islamabad Club

Source:   One Pakistan News

Flood-hit areas: SBP launches Rs 10 billion plan

KARACHI (November 03, 2010) : Announcing special relief package for borrowers of flood affected areas, the State Bank of Pakistan on Tuesday launched Rs 10 billion concessional financing scheme for SMEs and agricultural sector, and allowed banks/DFIs rescheduling of loans in the flood affected areas.

The financing scheme will be for one year, with a mark-up of 8 percent per annum, and banks have been instructed to evaluate loan applications in five working days. However the relief would be only for the borrowers of flood affected areas, identified by the National Disaster Management Authority (NDMA) and, under the relief package, banks may defer loan payment for a maximum one and a half year.

On Tuesday, the State Bank issued three different circulars for these relief packages. According to SBP circulars banks/DFIs and microfinance banks (MFBs) are encouraged to reschedule/restructure Agriculture SME and microfinance loans/advances loans to such borrowers, as per existing Prudential Regulations (PRs) for Agriculture, SME Financing and MFBs, where the possibility of recovery exists.

For all such rescheduled/restructured loans and advances, MFBs may defer loan provisioning up to December 31, 2011. However, classification of such loans will be made as per criteria laid down in the relevant PRs. The SBP has made it clear that current relaxation is available for loans and advances which have become non-performing since July 1, 2010 in the affected areas identified by NDMA, and loans/advances classified before this date shall not qualify for this relaxation.

" Any misuse of above relaxations would attract penal actions under the provisions of MFIs Ordinance 2001," the central bank warned the banks/DFIs and MFBs. In line with the Government of Pakistan policy for revival of agriculture activities and SBP relief measures for improving access to financing in flood affected areas, it has been decided to launch a concessional financing scheme through banks for agricultural production/working capital finance to farmers and small & medium enterprises (SMEs) in districts affected by recent flood as notified by National Disaster Management Authority.

Under the scheme, financing will be provided at affordable/concessional mark-up rates through banks/DFIs for which Rs 10 billion has been allocated. All categories of farmers comprising owners, owner-cum-tenants and tenants of the specified areas will be eligible for agricultural loans under the scheme.

However, agricultural credit means only farm credit for meeting the production/working capital requirements, as defined under the Prudential Regulations for Agriculture Financing. Under the scheme, banks will provide agricultural loans to farmers as per their Lending Policy approved by their Board of Directors and SBP Rules & Regulations.

Banks are encouraged to arrange, for insurance, the loans provided under the scheme and Mandatory Crop Loan Insurance for five major crops, viz wheat, rice, cotton, sugarcane and maize, to avoid risk of losses due to natural calamities, the SBP circular said.

Tenor of the crop production loans and repayment of the principal amount will be based on the cropping cycle up to a maximum period of one year, while the borrowing limit of farmer will be fixed by the bank, keeping in view credit requirements, cash flows, repayment capacity, risk profile of the borrower, etc. Under the scheme, banks may provide short-term loans to SME borrowers, as defined in Prudential Regulations for SMEs in flood affected districts.

However, banks will follow their lending policies approved by their Board of Directors and SBP rules & regulations. Banks will provide short-term loans for working capital requirements of SMEs for a maximum period of one year. The borrowing limits of SMEs will be fixed by the banks, keeping in view credit requirements, cash flows, repayment capacity, risk profile of the borrower, etc within the maximum limit prescribed under Prudential Regulations for SMEs.

Refinance under the scheme will be provided to the banks at 5.0 percent pa. The banks shall be permitted to charge a maximum spread of 3.0 percent pa from the borrowers; therefore credit to SMEs/farmers will be available at 8.0 percent pa. The State Bank will provide refinance in terms of Sections 17 (2) (b) and (d) read with section 22 of State Bank of Pakistan Act, 1956 as amended from time to time.

Limits will be allocated to individual banks under this scheme having branches involved in SME/agri lending in eligible areas. SBP has asked that interested banks may send their request for sanctioning of limit for current financial year to Director, SME Finance Department, within 7 days of issuance of circular, separately for SMEs and agriculture finance.

The banks can approach SBP-BSC (Bank) offices for availing the refinance facility under the scheme on weekly basis, once limits are approved and communicated to the banks concerned. Refinance will be allowed to the banks by SBP BSC (Bank) offices on submission of documents as may be required by State Bank. The documents initially required are attached herewith.

Principal amount of loans under the scheme shall have to be repaid on agreed date between bank and the borrower within a maximum period of one year. However, if a borrower repays the loan amount, in part or in full, before the due date(s), the banks will be under obligation to repay the amount(s) so received within seven working days to the SBP-BSC (Bank), failing which fine for late adjustment of loan will be recovered from the concerned bank, at the rate specified by the State Bank.

The refinance granted by SBP-BSC offices to the banks will be recovered within seven days of the due dates as reported to the office from the account of the banks maintained with the respective office of the SBP-BSC (Bank). In case the borrowers fail to make repayment of the amount of loan/instalment as per agreed dates, the bank will be entitled to charge normal rate of mark-up on such overdue principal amount, besides taking other actions to recover the same as are incidental to such defaults.

In no case the liability of banks to pay/repay to SBP BSC the principal amount of refinance, or mark-up or any other charges or penalty thereon will be dependent upon the recovery from the borrower, nor will such liability be affected by any default on the part of the borrower.

Mark-up will be paid on quarterly basis in case of financing to SMEs. However, mark-up on agricultural loans will be paid on half-yearly basis. Financing facilities already extended, and outstanding, will not be eligible for refinance /debt swap. Financing under the scheme will be subject to compliance with all the rules and regulations, including Prudential Regulations for SMEs and Agriculture Financing.

Banks will not take more than 5 working days in evaluating an application for credit under the Scheme from the date of receipt of complete information from the borrower. Where the request is declined, the bank will explicitly apprise the applicant reasons for rejecting the application. The bank will obtain an undertaking from the borrower that the disbursed amount will be utilised strictly for the purpose it has been granted.

Banks will ensure fulfilment of requisite pre-disbursement formalities by the borrower through due diligence as per their own internal arrangements to avoid malpractice and mis-utilisation of funds under the scheme. Refinance will be provided on the basis of certification/confirmation by the Internal Audit/ SME/Agri Head/Business Chief of the financing bank that the loan is within the terms and conditions laid down in the scheme.

Financing under the scheme shall be checked/verified by SBP's Banking Inspection Department (BID)/ SBP-BSC Bank to ensure that the same have been allowed as per the terms and conditions of the scheme. In case of violation of the terms & conditions of the scheme, the State Bank reserves the right to recover the amount of refinance granted to the bank along with fine at the rate of paisa 60 per day per Rs 1000 or part thereof.

In case bank fails to deposit to the concerned office of SBP-BSC the loans instalment/amount received from the borrower before the due date within seven working days as mentioned in Para 5(b) above, late adjustment fine will be charged from the concerned bank at the rate of paisa 60 per day per Rs 1,000 or part thereof. "Above Scheme will be effective from November 2, 2010 and will remain valid only up to October 31, 2011. However, outstanding refinance will be recovered on the maturity of respective loans," the SBP said.

Source:   Business Recorder

BRAC, American Pakistan Foundation Partner for Post-Flood Rehabilitation

âAlmost 21 million people have been directly affected by flooding in Pakistan. With 23 out of 94 BRAC Pakistan €™s microfinance branches affected by the flooding, BRAC is close to the people and communities that have been suffering as the disaster began to unfold in July. BRAC Pakistan launched relief efforts using its institutional knowledge of emergency relief, and its network of community volunteers to identify and provide support to communities in greatest need benefiting over 200,000 people.

BRAC has created a partnership with the American Pakistan Foundation to start livelihood recovery efforts across three districts in the Khyber Pakhtunwa province of Pakistan. The program will enable 200 households, particularly the most vulnerable and marginalized, who have been completely devastated by the disaster, to recover their assets and livelihoods.

Source:   PRWEB

Al-Huda, Asasah Partner to Promote Islamic Microfinance in Pakistan

The Al-Huda Centre of Islamic Banking and Economics (CIBE) has partnered with Asasah to help reduce poverty in Pakistan by providing its services in Islamic microfinance product development. Al-Huda will design manuals describing Islamic financial products, provide accounting and auditing treatments, Shariah supervision, and help train staff members. Al-Huda will also help Asasah develop Shariah compliant IT solutions.

Al-Huda and Asasah plan to open Pakistan’s first shariah compliant branch by March 1, 2010. Asasah also expects to make all of its 27 branches shariah compliant in the future.

Source:   Al-Bawaba Reporters

The PMN and its Seven Members win the Silver Award for Social Performance Reporting

We are proud to announce that seven members of the Pakistan Microfinance Network (PMN) have been awarded the Silver Award for Social Performance Reporting by the Social Performance Task Force (SPTF). The award comes from the Consultative Group to Assist the Poor (CGAP), the Dell Foundation, and the Ford Foundation. Since this year’s winners constitute nearly a third of the PMN’s membership, PMN received a recognition award at a ceremony sponsored by CGAP and The MiX. We would like to acknowledge the seven PMN members, namely the Centre for Women Cooperative Development (CWCD), DAMEN, the Rural Community Development Society (RCDS), the Sindh Agricultural and Forestry Workers Coordinating Organization (SAFWCO), Sungi Development Foundation (SDF), Thardeep Rural Development Programme (TRDP), and the First MicroFinanceBank (FMFB). Asasah was also a previous recipient of this award when the award certification was first launched in Madrid in

Source:   PMN

Telenor, Tameer Bank Launch “Easypaisa”

Telenor Pakistan and Tameer Microfinance Bank have announced the launch of "Easypaisa", a convenient and safe way to carry out financial transactions. Easypaisa users will have the freedom to make bill payments and send and receive money at thousands of outlets, and manage their bank accounts from their mobile telephones. Easypaisa combines the best from the financial and mobile sectors offering the first branchless banking solution of its kind in Pakistan and its neighbouring countries.

Source:   Pakistan Observer

SBP declares TMFB as scheduled bank

KARACHI (September 18, 2009): The State Bank of Pakistan on Thursday declared Tameer Micro Finance Bank Limited as scheduled micro finance bank. In a press release, the central bank said: "in exercise of the powers conferred on it by clause (a) of sub-section (2) of Section 37 of the SBP Act, 1956, the SBP is pleased to declare "Tameer Micro Finance Bank Limited" as scheduled micro finance bank (MFB) for the purpose of its direct membership of clearing house with immediate effect.

Source:   Business Recorder

The First MicroFinanceBank and Harvard University to Research Social Performance

Karachi (September 11, 2009). The First MicroFinanceBank Ltd. (FMFB) recently signed an agreement with Harvard University to develop social performance indicators through a participatory approach whereby the poor articulate their needs and influence the Bank's organisational performance management system so they can be used to assess the impact of the Bank's creation of microfinance products and services.

The project's ultimate aim is to integrate these social performance indicators into the Bank's services for poor populations in Pakistan.

Source:   Ismailimail in Agency for Microfinance, Asia, Pakistan

State Bank of Pakistan (SBP) Launches New Credit Guarantee Facility for MFIs

The State Bank of Pakistan (SBP) has launched a credit guarantee facility that will ensure a smooth flow of liquidity to microfinance banks. The Microfinance Credit Guarantee Facility (MCGF) will ensure that 40 % of funds provided by banks to liquidity-starved microfinance institutions (MFIs) are repaid in case of defaults. The Department of International Development (DFID) has extended a GBP 10 million (USD 15 million) grant which will be kept in a pool of reserves and used for issuing guarantees to microfinance providers.

The facility is part of a GBR 50 million (USD 74 million) three-programme initiative launched by the SBP with the assistance of the UK’s “Government Financial Inclusion Programme” and an endowment fund worth USD 20 million under the Asian Development Bank’s (ADB) “Improving Access to Financial Services” programme. As an incentive, funds given to microfinance banks will be deducted from the demand and time liabilities of banks for the purpose of statutory liquidity requirements (SLR) and cash reserve ratio (CRR) calculations.

Source:   The NEWS