Pakistan : An Ordinance for Microfinance Institutions

This document presents the ordinance passed by the Government of Pakistan (GoP) to regulate the establishment and operations of MFIs and for matters connected therewith.

The document states that:

• Objective of the ordinance was to promote the establishment of MFIs that could provide organizational, financial, and infrastructural support to the poor people, particularly to poor women;
• Overall purpose of the ordinance was to mitigate poverty and promote social welfare and economic justice through social mobilization.

The provisions of the ordinance are categorized under various chapters, these provide information on the:

• General provisions of the ordinance, extent of coverage in Pakistan and the commencement date;
• Technical terms used in the ordinance for better clarity and understanding;
• Establishment and winding up details of MFIs along with various restrictions and prohibitions that were applicable to them;
• Licensing requirement from any State Bank to be able to collect deposits, powers of the State Bank of Pakistan to grant or cancel license to any MFI;
• The management and administration details outlining the role, functions and power of the board of directors;
• The reserves and exemptions the Bank was to maintain, along with the kind of auditing processes it had to undergo.

The document also outlines the process for making internal regulations for the Bank and the cognizance procedures in case of offence committed against it.