The State Bank of Pakistan has increased the loan limits for housing finance and small enterprise from Rs 1 million to Rs 3 million which can be availed from microfinance banks.
The State Bank of Pakistan (SBP) also revealed that the size of the general loans increased from Rs 150,000 to Rs 350,000.
According to the details shared by banks officials, the decision was made to enhance the limit as the current loan scheme was inadequate to endorse low-cost housing finance via microfinance banks.
“To commensurate with enhanced loan sizes, the annual income eligibility for general loans and housing loans has been increased to Rs1.2 million and Rs1.5 million, respectively,” it said.
The enhancement in gold security also increased to meet the instant domestic or emergency need.
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According to State Bank of Pakistan, microfinance banks who provide service to unemployed or low-income individuals can be able to increase the loan limits against gold security to fulfill the domestic or emergency need. Total loan exposure of banks against the security of gold will not surpass 50 percent of its gross loan portfolio.
“The above relaxations will expire after one year from the date of issuance of these instructions. Thereafter, MFBs will reduce their aggregate loan exposure against the security of gold to 35 percent within a maximum period of one year,” said SBP.
However, to make sure sustainability the increased loans for housing finance and small business will only allowable to those Microfinance Banks who are capable to successfully provide the maximum loan size to the citizens.
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“Only those MFBs that are fully compliant with Minimum Capital Requirement (MCR) and Capital Adequacy Ratio (CAR) shall be eligible to undertake microenterprise lending”, said SBP.