Pakistan: State Bank to launch Pilot Micro Finance-Credit Information Bureau

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May 2010
Karachi, Pakistan, May, 20 2010 - The State Bank of Pakistan (SBP) will launch a pilot Microfinance-Credit Information Bureau (MF-CIB) on Friday, a statement said on Wednesday.

Syed Salim Raza, Governor, SBP, would inaugurate the pilot MF-CIB in Lahore, it said.

The MF-CIB is a joint venture of Pakistan Microfinance Network (PMN), UK’s Department for International Development (DFID), Citi-Foundation and the central bank.

The initiative is being viewed as a unique public-private partnership model in which the State Bank, PMN and its members (association and industry players) will jointly work to build synergies and provide a much-needed service for the microfinance industry, the statement said.

The MF-CIB will be a significant step towards improved risk management practices and reducing over-indebtedness of low-income clients, it said.

Initially, the pilot credit bureau will contain data only from 11 microfinance providers working in Lahore district. “These players comprise three microfinance banks, five microfinance institutions, two rural support programmes and one commercial finance institution,” the statement said.

The pilot will start reporting ‘negative’ (defaulters) list supplied by these organisations. The pilot Credit Bureau in Lahore will serve as a centralised database to store all past and present credit transactions of an individual who has been declared a defaulter.

Currently, microfinance banks, regulated by the State Bank have access to the central bank’s e-CIB, however, a large number of microfinance clients (approximately 50 per cent) are served by non-regulated microfinance institutions with no credit history of their customers either at the State Bank or a private CIB.

Both microfinance banks and microfinance institutions are operating in the same market with good chances of overlapping customers, thus, risk of multiple-lending and over-indebtedness exists, the statement said.

The pilot bureau will provide an opportunity for the microfinance providers to experience real benefits of a fully functional credit bureau as it will provide clients’ credit profile, containing demographic information, ensuring proper identification, and including pertinent information relating to the creditworthiness and repayment capacity of an applicant.



 

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