Microfinance Industry Needs to Strengthen Resilience and Risk Management: SECP Chairman

SECP Chairman, Aamir Khan says that in these challenging times, the development of the microfinance industry depends upon resilience and risk management, achieved through quintessential pillars of liquidity-tapped through private capital and technology embracement.

Khan was addressing the Non-Bank Microfinance Companies (NBMFCs) Stakeholders Forum organized 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. The SECP Chairman Amir Khan, along with Commissioner Specialized Companies Division, Farrukh Sabzwari chaired the session.

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

Chairman SECP advised NBMFCs to go for product diversification, insurance solutions, saving products, and building the capacity of their workforce to attain business development and operational efficiency. He endorsed the formation of a working group consisting of nominees from SECP, PMN, PMIC, and NBMFCs to further analyze 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 the industry not only during the current pandemic but also in developing the industry on a strong footing.

SECP Commissioner, Sabzwari highlighted the measures taken by SECP to provide relief and flexibility to the 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 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 may lead to a capital crisis in the industry. They expressed the need for 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 the fullest possible support to Pakistan’s microfinance sector.

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