KARACHI, March 20: The State Bank of Pakistan has allowed microfinance banks (MFBs) to raise capital through term finance certificates (TFCs) to meet the revised 15 per cent capital adequacy ratio.

The SBP made amendments in the prudential regulations on Thursday carrying a decision to revise the minimum capital requirements for the MFBs.

The central bank set different slabs of minimum capital requirement, which depends on the range of working areas of MFBs.

According to new amendment, the microfinance banks will maintain a minimum paid-up capital, free of losses, of not less than Rs100 million for MFBs licensed to operate in a specified district.

Similarly, Rs150 million for MFBs licensed to operate in a specified region, Rs250 million for MFBs licensed to operate in a specified province; and Rs500 million for MFBs licensed to operate at national level.

The SBP said all MFBs are required to maintain at all times the minimum paid-up capital (free of losses) as prescribed above. However, in case any of the existing MFB does not meet the prescribed minimum paid-up capital requirement, it will make up the shortfall latest by December 31, 2008.

The other amendment says that the MFBs will also maintain Capital Adequacy Ratio (CAR) equivalent to at least 15 per cent of their risk weighted assets.

“For the purpose of maintaining minimum CAR, microfinance banks are also allowed to raise subordinated debt in local currency, subject to obtaining prior written approval from the SBP,” said the SBP.