KARACHI, Jan 5: The State Bank has created a $15-million new bank fund (NBF) to provide financial help to micro finance banks operating within a district or province. The central bank, through a press release issued on Wednesday, advised micro finance banks interested in accessing the fund to contact the head of its banking supervision department.

Micro finance banks, which operate within a district or province, can borrow money out of the fund to purchase computer hardware and software systems, vehicles for delivery of micro finance services and office equipment and furniture. They can also access this fund to finance "training for trainers" facilities.

The commercial banks interested in transformation of their cluster of rural/semi-rural branches into micro finance banks and provincial cooperative banks, provided they opt for conversion into micro finance banks, are also eligible to get financial help from the fund.

At present there are three micro finance banks in operation, out of which one is district-based and yet another has got the State Bank's licence to start district-based operations.

Khushhali Bank and First Micro Finance Bank went into countrywide operations in August 2000 and April 2002, respectively, whereas Network Micro Finance Bank started Karachi-based operations from last month. Rozgar Micro Finance Bank, inaugurated by Prime Minister Shaukat Aziz the other day, is also set to start operations in Karachi from this month.

The $15-million with which the SBP has set up the new bank fund has been contributed by the federal government under its Rural Finance Sector Development Programme (RFSDP) that it had initiated sometime back with the assistance of the Asian Development Bank.

"The RFSDP is aimed not only at building the capacity of the existing rural finance institutions, but also encouraging and providing incentives for the establishment of new rural/micro finance institutions in the private sector," says the SBP press release.

The purpose is to increase the outreach of micro finance on the one hand, and make micro finance market more competitive on the other. Micro finance banks, whether operating on district or provincial levels or providing countrywide services cannot lend more than Rs100,000 to a single party.