Microfinance industry needs to strengthen resilience, risk management: SECP chief

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) Chairman Aamir Khan Tuesday said the development of the microfinance industry depended upon resilience and risk management that could be achieved through quintessential pillars of liquidity-tapped through private capital and technology embracement.

Khan was addressing the Non-Bank Microfinance Companies Stakeholders Forum organised by SECP to devise a way forward and collaborate strategic response to cope with the challenges posed by the COVID-19 pandemic and ensuing lockdowns.

SECP Chairman Amir Khan along with Commissioner Specialised Companies Division Farrukh Sabzwari chaired the session.

Representatives of the Pakistan Microfinance Network (PMN), the State Bank of Pakistan (SBP), the National Bank of Pakistan (NBP), the Pakistan Poverty Alleviation Fund (PPAF), Pakistan Microfinance Investment Company Limited (PMIC), the Karandaaz Pakistan and multilateral donor agencies including the World Bank, the International Finance Corporation (IFC) and the Department for International Development (DFID) attended the session.

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The SECP chairman advised NBMFCs to go far product diversification to insurance solutions and saving products besides building capacity of their workforce to attain business development and operational efficiency.

He endorsed formation of a working group consisting of nominees from SECP, PMN, PMIC and NBMFCs to further analyse the situation. The working group will also take up the matters with relevant forums including the Ministry of Finance, SBP and multilateral donor agencies for possible solutions.

Khan expressed SECP’s firm commitment to providing all possible support to industry not only during the current pandemic times but also in developing the industry on a strong footing.

SECP Commissioner Farrukh Sabzwari highlighted the measures taken by the Commission to provide relief and flexibility to NBMFCs and their wholesale lender in managing funding requirements. He also talked about SECP’s advice to NBMFCs to defer and reschedule borrower loans.

Participants acknowledged the SECP’s timely intervention to provide regulatory relief to NBMFCs in managing their credit lines and funding requirements.

However, industry representatives expressed their concerns on potential defaults by borrower and liquidity crunch that might lead to capital crisis in the industry.

They raised the need of new money injection into the industry through collaborative efforts of microfinance regulators and the government.

Representatives of international donor agencies attending the forum expressed their resolve to extend fullest possible support to Pakistan’s microfinance sector.

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