KARACHI, Sept 10: The State Bank on Monday issued guidelines for the development of Islamic microfinance business amid growing popularity of Islamic banking in the country.

There is a separate legal and regulatory framework for microfinance banks which allows microfinance and commercial banks to extend range of microfinance services to poor and low income people through various arrangements.

The SBP said that in the wake of growing popularity of Islamic banking it was deemed necessary to provide options for provision of Islamic microfinance services by microfinance and commercial banks as well as allowing full-fledged Islamic microfinance banks in the country.

The SBP has formulated guidelines for provision of Islamic microfinance products and services by financial institutions.

These guidelines are aimed at broadening the coverage of microfinance products and services to low income segments in a Shariah-compliant manner. These guidelines stipulate four types of institutional arrangements for offering Islamic microfinance.

These included establishing full-fledged Islamic Microfinance Banks, Islamic Microfinance Services by full-fledged Islamic banks, Islamic microfinance services by conventional banks and Islamic microfinance services by conventional microfinance banks .

The criteria mentioned in these guidelines will be in addition to the requirements already issued by the SBP under respective category of financial institutions. These regulations and guidelines, by any means, are not replacing the regulations and guidelines already issued by the central bank from time to time in this area.