The pilot Microfinance Credit Information Bureau (MF-CIB) launched last Friday, is considered a significant step towards improved risk management practices and reducing over indebtedness of low-income clients.
At the launching ceremony of the pilot MF-CIB, a joint venture of Pakistan Microfinance Network, UK’s Department for International Development(DFID), Citi-Foundation and the State bank of Pakistan, the Deputy Governor, SBP emphasized that MF-CIB must ensure impartiality and integrity as its ultimate success will depend on the amount and accuracy of both credit and demographic information contained in the database.
The Deputy Governor, Kamran Shehzad also said, MF-CIB would not only strengthen and expand the microfinance sector, but also create a healthier credit culture, identify credit worthy borrowers, reduce instances of over-borrowing and fraud. “The bureau will also aid policy instruments by providing accurate indebtedness and delinquency information,” he added.
The microfinance sector had grown rapidly in the country in recent years as the number of microfinance borrowers increased from 451,000 in December 2004 to 1.83 million in December 2009, informed Mr. Shehzad. “This growth was facilitated by several factors, including an enabling policy framework, institutional reforms, technology initiatives, regulatory flexibility, tax incentives and alternate delivery channels.” He added that with the entry of new players and scaling up of the existing institutions the present growth momentum will further build. Another reason for this is the high demand for microfinance services with estimates ranging between 15 and 30 million people.