Conscious actions of national governments, non-governmental organizations (NGOs), and donors who view microfinance as an effective tool for alleviating poverty have resulted in the spectacular growth of the microfinance industry in the third world countries.
Realizing the role of microfinance in poverty alleviation, the State Bank of Pakistan on Wednesday issued a framework for establishing Micro Finance Banks. The Daily Times of Pakistan reports that the approximate combined outreach of Microfinance Banks and NGOs Microfinance Institutes (MFIs) is around half a million loan clients, that is less than 10 percent of the potential market of 6.5 to 7.0 million poor households.
According to the State Bank, these guidelines
…will serve the dual purpose of deepening and broadening of financial access in the country alongwith providing an additional avenue for banks to undertake socially responsible and commercially viable business proposition.
Also,
These guidelines envisaged four modes through which commercial banks can enter into microfinance services which include, establishment of microfinance counters in the existing branches, designating standalone microfinance branches, either through conversion of existing branches or opening of new microfinance branches and establishing independent microfinance subsidiary with independent and professional board and management under Microfinance Institutions Ordinance 2001.
Published Date: June 29, 2006