The State Bank of Pakistan (SBP) has announced a significant increase in the Minimum Capital Requirement (MCR) for Microfinance Banks (MFBs), setting the new standard at Rs 2 billion by June 2027. This move is part of a broader update to the prudential regulations (PRs) governing MFBs, designed to align with evolving market conditions and ensure the stability of the sector.
Under the revised regulations, both provincial and national MFBs must meet the Rs 2 billion minimum capital threshold by the deadline, with a phased approach.Â
Provincial MFBs, whose current MCR stands at Rs 500 million, will be required to raise their capital to Rs 1.5 billion by June 2026 and reach the Rs 2 billion mark by June 2027.Â
Similarly, national MFBs, which currently have an MCR of Rs 1 billion, will also follow the same phased increase, reaching Rs 1.5 billion by June 2026 and Rs 2 billion by 2027.
The MCR includes fully paid-up common shares, share premiums, reserves for bonus shares, and any other instruments approved by the SBP, minus accumulated losses and other deductions.Â
In addition to the capital requirements, MFBs must maintain a Capital Adequacy Ratio (CAR) of at least 15% of their risk-weighted assets.
The SBP’s revised regulations also focus on strengthening the governance, consumer protection, and operational frameworks of MFBs. These changes aim to help these institutions manage future growth and the increasing complexity of the microfinance sector, driven by technological advancements. The regulations are divided into three main categories: Risk Management, Corporate Governance, and Operations.
As part of the regulatory update, the SBP has emphasized that any deviation from the new guidelines will result in enforcement actions. The regulations will take effect immediately, although certain provisions may have delayed implementation dates.
