NGO/RSPS/Cooperatives – Transformation Guidelines


(enacted in 2005)

NGO/RSPS/Cooperatives – Transformation Guidelines contains detailed guidelines developed by the State Bank of Pakistan (SBP) to facilitate the transformation of non-government organizations (NGOs), rural support programs (RSPs) and cooperatives into formal microfinance banks (MFBs).

The guidelines define and discuss various aspects of the transformation and prescribe minimum requirements for transformation. The document states that those NGOs, RSPs and cooperatives that want to transform in to MFBs must: 

  • Clearly identify their objectives in wanting to transform; 
  • Valuate the costs against the benefits of transformation;
  • Have reasonable operational size and scale;
  • Have a professional approach to management;
  • Have full operational sustainability;
  • Have access to market-based, non-subsidized commercial funds;
  • Have the capacity to attract private risk capital;
  • Have minimum software to meet existing operations;
  • Have a rating from a reputed credit rating agency;
  • Arrange an independent institutional assessment of their capacity and advisability to
  • Transform in the given economic, political, legal and regulatory environment; and
  • Get consultants/auditors to review their:
    • Financial position and capacity;
    • Governance structure, human resources;
    • Control systems and environment; and
    • Accounting and management information systems.

The recommendations that the consultants offer for the process of transformation cover the following areas:

  • Information/documents to be submitted to the SBP for granting the license;
  • Relationship between the NGO and the MFB;
  • Approval in principle;
  • Grant of license; and
  • Commencement of business.