Meeting with SME Heads of Banks Mr. Imran Ahmad Additional Director Infrastructure, Housing & SME Finance Department State Bank of Pakistan February 19, 2018

Economic Importance of Sindh Economic Potential Handicrafts Agriculture & Livestock Natural Gas Dry Dates Tourism Banks can help explore the potential opportunities of industrial development in agriculture, handicrafts and other sectors of local economy.

Total Branch Network in Sindh Private Sector Financing of Rs. 1,576 billion* Bank Branches 2713 Bank Booths 113 Islamic Branches 682 * Source: SDWHD, SBP

Trends in SME Finance

Trends in SME Finance

Bank wise Position as of Dec-2017 S. No. Bank/DFI Name 1 Habib Bank Limited 10 Summit Bank Limited 19 Albaraka Islamic Bank 2 National Bank of Pakistan 11 Faysal Bank Limited 20 Standard Chartered Bank Pakistan Limited 3 The Bank of Punjab 12 Habibmetro Bank Limited 21 Bank Islami Pakistan Limited 4 Bank Alfalah Limited 13 Meezan Bank Limited 22 First Women Bank Limited 5 JS Bank Limited 14 Soneri Bank Limited 23 Sindh Bank Limited 6 Allied Bank Limited 15 Silk Bank Limited 24 Samba Bank Limited 7 Bank Al-Habib Limited 16 Askari Bank Limited 25 MCB Islamic Bank Limited 8 United Bank Limited 17 Dubai Islamic Bank Limited 26 Punjab Provincial Co-Operative Bank Limited 9 MCB Bank Limited 18 The Bank of Khyber

Outstanding SME Financing 28.4 % of Total SME financing SME Financing in Sindh Sector Gender Outstanding SME Financing Sindh Number of borrowers Amount (in Billion) Manufacturing Male 12,884 169.882 3,489 60.265 Female 392 5.761 95 2.049 Trading 28,666 143.985 5,732 37.009 833 3.627 232 1.479 Services 80,074 110.465 4,702 25.964 5,022 5.802 335 1.088 Total 121,624 424.332 13,923 123.238 6,247 15.190 662 4.616 Sub-Total 127,871 439.522 14,585 127.854 Grand Total 173,872 449.187 28.4 % of Total SME financing

Small Enterprises Financing Small Enterprise Financing Outstanding Sector Gender of Borrower Total Finance Outstanding to Small Enterprises Sindh   Number of borrowers Amount (in Billion) Manufacturing Male 5,241 22.686 1,211 5.957 Female 146 0.508 39 0.107 Trading 21,859 62.825 4,306 13.999 636 1.692 175 0.461 Services 76,557 58.762 3,719 8.251 4,886 3.844 295 0.591 Total 103,657 144.273 9,236 28.208 5,668 6.044 509 1.160 Grand Total 109,325 150.317 9,745 29.367 19.5 % of Total SE Financing

Medium Enterprise Financing Sector   Gender of Borrower Total Finance Outstanding to Medium Enterprises Sindh Number Amount Manufacturing Male 7,643 147.196 2,278 54.308 Female 246 5.253 56 1.943 Trading 6,807 81.160 1,426 23.010 197 1.935 57 1.017 Services 3,517 51.703 983 17.713 136 1.958 40 0.496 Total 17,967 280.059 4,687 95.030 579 9.146 153 3.456 Grand Total 18,546 289.205 4,840 98.486 34 % of Total ME Financing

SME Finance Targets for Sindh Region-wise targets’ distribution data has also been obtained. Last year, banks were themselves decided to allocate targets to various regions. SBP will be allocating region-wise targets in future. As per data received in June-2017, 27% of target was allocated by banks to Sindh. As per new province-wise targets, 28% has been allocated to Sindh for 2018.

Region wise SME HR Status of Banks Province Regions Total HR Punjab Lahore 1545 Multan Bahawalpur Rawalpindi Gujranwala Sialkot Faisalabad Others , mentioend below Vehari Rahim Yar Khan Jhelum Sahiwal Sargodha Gujrat Sindh Karachi 831 Hyderabad Sukkur Others Balochistan Quetta 81 Gawadar KPK Peshawar 240 D.I Khan Abottabad Kohat Mardan Hattar others Capital Islamabad 124 AJK Muzaffarabad 75 Gilgat Biltistan 2 Region wise SME HR Status of Banks

Position of SME Related HR in Sindh

Policy for promotion of SME Current Status SME share is 8.7% of private sector credit No. of borrowers is 165,000 Benchmarks Increase SME share to 17% of private sector credit Increase no. of SME borrowers to 500,000

Policy for Promotion of SME Finance Pillar # 1 Improving Regulatory Framework Pillar # 2: Upscaling through Microfinance Banks Pillar # 3: Risk Mitigation Strategy Pillar # 4: Simplified Procedures for SME Finance Pillar # 5: Program based Lending & Value Chain Financing Pillar # 6: Capacity Building & Awareness Creation Pillar # 7: Handholding of SMEs-Non Financial Advisory Service Pillar # 8: Leveraging Technology to Promote SME Financing Pillar # 9: Simplifying Taxation Regime for SMEs

SBP’s Interventions to Promote SME Finance Legal & Regulatory Infrastructure Legal & Regulatory Infrastructure Capacity Building of Banks & Others Separate Prudential Regulations (2003) Separate PRs of SEs and MEs (2013) Secured Transaction Act (2016) SME Target Regime Establishing E-Registry SBP Refinance and Credit Guarantee Schemes Customized provincial schemes Islamic SME Financing SME Cluster Surveys Non Financial Advisory Services Bankers Collaboration with NIBAF, IBP, academia SMEs Financial Awareness, Handholding, coordination with SMEDA, TDAP, other entities (associations, trade organizations, TUSDEC, PGJDC, OICCI, PBIF)

Future Target Allocation  Projection 2017 2018 2019 2020 Total Private Sector Financing 4,644 5,038 5,390 5,768 Outstanding SME Financing 515 623 870 1,173 Islamic Banking 65 86 125 218 Development Finance Institutions 2.8 3.6 4.5 6.8

SBP Schemes Export Finance Scheme Financing Facility for Modernization of SMEs Financing Scheme for Renewable Energy Financing Facility for Storage of Agricultural Produce Refinance and Credit Guarantee Scheme for Women Entrepreneurs in Underserved Areas

Outstanding Financing under SBP Schemes (Rs in Million) SBP Schemes Total Sindh Export Finance Scheme (EFS)     300,115 140,981 Islamic Export Refinance Scheme (IERS)       46,390 35,179 EFS -SMEs 10,896 3,212 Long Term Financing Facilities  106,638 57,257  Long Term Financing Facility (LTFF) for Plant & Machinery        98,532 50,597 Financing Facility for Storage of Agricultural Produce (FFSAP)          1,316 575 Refinance Facility for Modernization of SMEs ^             41 29 Scheme for Financing Power Plants Using Renewable Energy          6,749 6,056 * As of 29-12-17, ^ As of 30-09-17

Credit Guarantee Scheme SBP launched CGS for Small and Rural Enterprises in March 2010 Risk coverage of up to 60% against credit losses of PFIs’ lending to small, micro and rural enterprises Scheme aims to encourage lending towards fresh and collateral deficient borrowers In addition to this, risk coverage of 60% against all loans extended to women borrowers, start-up businesses and small, rural and micro enterprises operating in the under-served areas of the country

Credit Guarantee Scheme (as on September 30, 2017) Province Sum of Amount Sanctioned Azad Jammu and Kashmir 176,510,000 Baluchistan 84,175,000 Federal Capital 140,131,835 Federally Administered Tribal Areas 5,000,000 Gilgit -Baltistan 2,000,000 Khyber-Pakhtunkhwa 1,330,852,610 Punjab 16,286,033,407 Sindh 4,723,187,778 Grand Total 22,747,890,630

Non-Financial Advisory Services (NFAS) Non-Financial Advisory Services are business support services, enterprise development or value added services which compliment the financial offerings of a bank NFS can facilitate financial inclusion and help reach new target segments such as MSMEs, farmers, women and start-ups

Promotion of SME Financing Following efforts have been made to promote SME financing in Sindh: Governor SBP’s meeting with the banks and business chambers/ associations of Sukkur/ Larkana Region Awareness program for the banks in Sukkur on BMR Scheme Meeting of SBP officials with the regional managers of banks and Sindh Balochistan Rice Millers Association at Larkana Meeting of SMEDA, SBP and banks to increase interaction SME Focus Group meetings Meetings with different associations and government departments

What is needed? It is highly needed to: Enhance access to credit in Sindh Increase interaction among banks, SMEDA, associations, clients and other stake-holders Depute SME specific human resources Delegate credit approval powers Uptake in Technical Assistance component of CGS Non-Financial Advisory Services Create awareness on SBP schemes and provide necessary knowledge (on documentation) Improve utilization of SBP schemes in Sindh (BMR, SEDF)

Thank You