CIPE Roundtable on Microfinance Outreach continues to reap impact

As a result of CIPE microfinance stakeholders’ advocacy initiative in August 2007, the State Bank of Pakistan introduced a new policy for microfinance banks in August 2008. The new policy incorporated 80 percent of recommendations from the private sector. These recommendations focused on two issues: a) increase in the outreach of microfinance, b) reduction of the cost of borrowing.

In Pakistan, microfinance banks were not allowed to take deposits, resulting in non-availability of cheaper funds for extending credit. This did not help the microfinance sector to become sustainable nor offered incentives for expanding outreach throughout Pakistan. The new policy allows microfinance banks to mobilize deposits on-location.

The State Bank of Pakistan (SBP) also set a target to increase the number of borrowers from 1.2 million to 2.5 million by the year 2010. With an estimated market of 25-30 million borrowers, microfinance institutions in Pakistan are looking at expanding to a massive market in the years to come.

Published Date: December 03, 2009