Voices of Microfinance: Pakistan- A Protected Microfinance Borrower?
This paper highlights the laws and regulations affecting microfinance consumers in Pakistan. It discusses the role of regulatory agencies, self-regulatory organizations and industry associations in spreading awareness among consumers and protecting their rights.Microfinance banks and MFIs in Pakistan are regulated by the Microfinance Institutions Ordinance 2001. Pakistan has a matrix of regulators and coordinators for the microfinance industry, including The State Bank of Pakistan (SBP) and The Pakistan Microfinance Network (PMN). The paper examines aspects of microfinance regulations and MFIs in Pakistan that impact consumers. These include:
- Transparency and disclosure in lending practices of MFIs, and emphasis on consumer education;
- Type of collateral collected and enforcement method adopted by MFIs;
- Credit information sharing, and onus for over-indebtedness;
- Loan recovery mechanisms;
- Accessibility to consumer redress mechanisms.
The paper identifies areas for further study and observation. These include the course of action that PMN would adopt if members go against the established Code of Conduct, and the application of a set of social ratings to microfinance banks.
