The State Bank of Pakistan (SBP) announced on Monday that it would increase the limits for real estate financing and micro business loans from the current Rs 1 million for microfinance bank loans to Rs 3 million.
Likewise, the maximum size of general loans has been improved from Rs 150,000 to Rs 350,000. The central bank said the annual eligibility for general loans and home loans was increased to Rs 1.2 million and Rs 1.5 million, respectively, to accommodate the improved loan size.
In addition, the limit on the provision of gold loans to meet the immediate domestic or emergency needs of the borrower has been improved.
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SBP considered that the decision to increase the credit limit for home financing was taken because the existing credit limit was insufficient to encourage low-cost MFA home financing. Likewise, the limits on loans to micro businesses needed to be tightened in light of the high unmet demand from micro and small businesses (MSEs).
The SBP said these initiatives would continue to support micro-borrowers and businesses, as well as an early resurgence in economic activity in the current troubled times. "However, in order to ensure sustainability, the improved loans for households and micro-businesses would be permissible for those MFAs that are in the right direction and able to meet the higher loan size."
In addition, SBP extended its emergency package to microfinance banks, including the most important deferral and restructuring of microfinance loans to address the negative impact of the ongoing Covid-19 pandemic.
First, the relief measures that were previously available from February 15, 2020 are now allowed for borrowers who were regular on December 31, 2019. This could allow more borrowers to take advantage of the previously unjustified legal remedy.
Second, the delivery requirements have been extended by 2 months to facilitate MFAs during these test periods. and third, customer consent is allowed on registered lines to make it easier for customers to use the help package.
