SBP-PC row over microfinance domain

Friday, September 11, 2009

ISLAMABAD: The Planning Commission and the State Bank of Pakistan have divergent views on issues related to micro-finance as the latter has sent an official communication barring the planning managers from intervening in the domain of the central bank, it is learnt. However, the Planning Commission has pointed out that the regulation of the micro credit were not up to the mark, resulting into increasing intermediatory cost of microfinance institutions in the range of over 30 to 40 percent in shape of mark up, which is continuously being charged from small voiceless borrowers. A tug of war persists as the Governor State Bank (SBP) has written official letter to Secretary Planning Division by raising objections on active persuasion of Planning Commission s Social Sector Initiative to plunge into the affairs of the microfinance by arguing that it was not jurisdiction of the PC to interfere into the matters of financial sector.
The Planning Commission high-ups say that the operation side of microfinance definitely lies under the jurisdiction of the SBP. However, its policy side falls into the mainstay of the Planning Commission and it will continue to give its input for formulating the upcoming National Micro Credit Policy. Talking to The News on Thursday, Secretary Planning Commission Ashraf M Hayat said that the poverty is the main concern of the Planning Commission as it wanted to devise policies in order to tackle this menace effectively. The Planning Commission s Member Social Sector, Shaukat Hameed, when contacted, said that they were working on microfinance institutions for last six months where they found flaws in regulations. We are giving our recommendation to rectify the situation, he added.

Want to read full story? visit finance.kalpoint.com now!