In another boost for microfinance banks, the central bank has made the opening of permanent booths easier. —File photo

KARACHI The State Bank on Thursday allowed microfinance banks to use their permanent booths for mobilisation of deposits.

'With a view to enhancing the outreach of financial services to underserved areas by microfinance banks (MFBs) and to provide them an enabling environment for resorting to cost-effective means of deposit mobilisation, the State Bank has decided to enhance the scope of permanent booths under its Branch Licensing Policy,' said the SBP circular issued to the MFBs.

According the circular issued to the chief executives of all microfinance banks, the State Bank has informed them about the change made for the MFBs with immediate effect.

The circular said the MFBs may be granted licence to open permanent booths for deposit taking or withdrawal, issuance of other mode of transactions including pay order, receiving utility bills, disbursement and recovery of micro loans.

The MFBs will be required to apply to SBP for opening of permanent booths approved. However, account opening and issuance of account number and other formalities including know your customer (KYC) and customer due diligence (CDD) will be performed by the controlling branch (not by the permanent booth).

Previously MFBs were granted licences to open a permanent booth for receiving utility bills or for making spot payments only in special or exceptional circumstances after obtaining prior approval of the SBP.

However, MFBs were free to open a booth for a special occasion for a period not exceeding one month, in such locality where the MFB has already a place of business.