Exploitation of microfinance banks compared to commercial banks
Introduction
The bad news for small savers is that there is no protection for those who save from their monthly salary. The bad news for small savers who keep their money in microfinance banks is that microfinance bank depositors have no protection, unlike commercial banks.
The government has postponed the Microfinance Depositors Protection Consumer
The bad news is that the government has postponed the Micro-financing Depositors Protection Policy because of the recent IMF loan of $3.1 million and because of the standby arrangement. Such steps are being taken to get SBA green lighted in the executive board meeting on July 12. According to the board member’s report prepared for the July meeting, the officials in Washington decided to urge the lenders to postpone the framework of the protection policy for micro-financing in Pakistan until the existing cartel in the sector is eliminated.
Strengthen Commercial banks as compared to microfinance banks
In simple terms, the plan appears to be designed to strengthen commercial banks and weaken microfinance banks. It seems that IMF wants SBP’s loopholes to be eliminated by the Deposit Protection Corporation, which is a subsidiary of the State Bank of Pakistan. If this bank fails, it is bound to its depositors. So it is binding every bank pays 500000 as protection to the customer. 33 banks in Pakistan are guaranteed by DPC. The IMF seems to want some microfinance banks that fail to protect their clients’ capital or operate in non-compliance with other regulations.
Regular financial planning
IMF officials in Washington want the financing plans for these banks not to be extended for now until a new regular financing plan is introduced for these banks to control their operations. Twelve microfinance banks that prefer working with minimum capital are working with amounts ranging from Rs 500 to 300 million. These microfinance banks that operate at the national, provincial, and district levels fail to protect their customers’ money because they do not have a clear strategy.
CEO Of Microfinance bank
Azam Khan, CEO of Microfinance Bank Limited, while talking to the newspaper, said that there are some small banks that are investing less, but because of these small banks, banks that protect their customers should not be exploited. The deposit protection that commercial banks are getting should also be given to them. In this regard, Azam Khan further said that there are commercial banks that do not provide protection to their customers with low capital.
MFB also provide Consumer protection
He further said that depriving micro-savers of this protection is beyond reason. He said that microfinance bank also provides protection to its 5 lakh deposit customer. Like commercial banks. Apart from this, microfinance banks also provide other facilities. To their customers, so depriving them of a deposit facility will not be a correct move in any way.
Pakistan officials Promise to Negotiate MFB Owners
Pakistani officials have promised to negotiate. With the owners of microfinance banks. And ensure that they ensure the availability of capital to their customers. In March, Pakistan’s microfinance investors had deposits of 98.1 million. Which was a profit of 4.4 million in the first quarter. Only Telenor Microfinance and Mobilink Microfinance provided total capital protection of 81 million. Thus, its active savers are around 81 million. If we look at it from the point of view of a common consumer. It is really exploiting the micro-financier’s account by not paying attention to it.
