Smeda

aSME BANKING
REGULATORY FRAMEWORK
Infrastructure, Housing & SME Finance
Department

State Bank of Pakistan

SME
SME Sector in Pakistan
 SMEs are engine of growth, employment, and income distribution leading to poverty alleviation.

 SMEs are nurseries of entrepreneurship and innovation
 SME sector contribution is around 30% towards GDP , employs more than 70% of non-agricultural workforce and contribute
25% to export earnings of Pakistan.

 99% of total 3.2 million economic establishments in Pakistan are SMEs.

Credit
Credit to SMEs – Trends & Current position
Rs. in Billions

Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
SME-O/S 284.0
SME NPLs 30.1
% age
Share

10.6

361.4
42.1

408.3
36.0

437.4
41.3

383.0
61.5

348.2
79.2

334.0
96.5

11.6

8.8

9.4

16.1

22.7

28.9

• SME Finance portfolio forms about 10% of total banking sector advances which is proportionately lower keeping in view the huge potential of SME sector.
• There has been decrease in SME Finance in the last 2 years due to economic & financial crises, power outages, deteriorating law & order situation in the country.

Current SME Finance Portfolio
Region Wise Distribution of SME Finance
Sind
25.93%
NWFP
3.73%
Balochistan
1.52%

Other
0.88%

Punjab
64.22%

Capital
3.71%

AJK
0.73%

Gilgit Baltistan
0.15%

FATA
0.01%

Some
Some major Issues in SME Finance
Demand Side Issues & Constraints
 Absence of Proper Accounts Management, Business Planning, Missing

Formal

Management
 Lack of Collaterals to Meet Banks’ Requirements
 Low level of Awareness about Different Financing Options
 Absence of Reliable and Credit Worthy data

Supply Side Issues & Constraints
 Shortage of Credit Evaluation, Product Design, Marketing Skills and non- Innovative non- Products
 Perceived to be High Risk Projects by Banks
 Absence

of Credit
Lending, Downscaling

Scoring,

 Absence of SME R