SBP amends prudential regulation for MFBs

State Bank of Pakistan (SBP) has decided to amend Prudential Regulation No. 12 for Microfinance Banks (MFBs) pertaining to Classification of Assets and Provisioning Requirements. According to a Circular (MFD Circular No.3) issued on Tuesday, it has been decided that in addition to cash collateral, gold (ornaments and bullion) shall also be considered for specific provisioning against non-performing loans. It may be mentioned here that previously MFBs could only take benefit of cash collateral while meeting the specific provisioning requirement against non-performing loans. However, after this amendment in the Prudential Regulation gold would be treated at par with cash collateral' for specific provisioning requirement against non-performing loans. This will ease pressure on capital adequacy ratio of MFBs.