1. Group 3:Risk Management & MIS Chair: Mr. Safar Ali Lakhani President Soneri Bank Limited

2. Recommendation 1 Set up SME as dedicated BU within Bank: –Industry sector know-how –Subsegmentation & coverage model –Know-your-customer (relationship based model) –Mindset shift in Risk Management (portfolio based management with predefined triggers)

3. Recommendation 2 Start with limited exposures Set up limit for starters at maximum consumer finance (e.g. PKR 500K) Encourage job creation

4. Recommendation 3 Keep it simple and short: New customers have limited data Customer self assessment to be used (sales figure) Develop matrix of Years in Business and Years with Bank and provide financing as % of sales

5. Recommendation 4 Verification of loan utilisation: direct payment from Bank to Vendor for larger amounts, if possible

6. Recommendation 5 Invest in IT to track and monitor large number of accounts and its performance

7. Recommendation 6 Risk Mitigation –Expand eligible collateral –Cash-flow analysis –Credit insurance –Personal and/or 3 rd party guarantees –Risk based pricing

8. Recommendation 7 Develop MIS (centralised): –Actuals –Trends –Stress Testing –Risk Triggers (predefined) –Collections incl. Time buckets and action plans

9. Recommendation 8 Strengthening of Credit Bureaus: Positive data Credit history Expanding role of private Credit Bureau (incl. Rating agencies)