SME, Micro Finance & Agriculture
Finance.
Capsule Statement
Over the last few years Pakistan witnessed phenomenal growth in different types of banking types
along with regular conventional banking. These different types mainly include SME, Micro Financing,
Consumer, Islamic and Agricultural banking. This categorization is mainly to identify specific area of
the businesses and then financing accordingly keeping in view the needs and regulations.
The objective of this course is to develop a deeper understanding of the newly formed branches of the
banking industry. The main focus will be on the Prudential Regulations of State Bank of Pakistan
regarding each category specifically, their implementation and financing analysis keeping in view the
financing industry. SME itself hold major portion of financing amount of the commercial banks as it
give boost to the middle line industry in the market. Banks are focusing it due to its size,
entrepreneurship and government policies. Again Pakistan being agriculturist country always requires
attention of all financing institutions in this field. Almost every listed commercial bank is feeding
agricultural industry in its own way and managing it as an independent portfolio. The most recent
form of modern banking is Micro Financing, which is to cater the below average class of the economy
and to inject financing to strengthen and boost low level business.
Learning Objectives
The focus of the course shall be as follows:
 Development of practical insight amalgamated with analytical management skills on the
students of SME, Micro Financing & agricultural banking.
 Since these types of banking are radically on the risk, therefore entrepreneurs already
working in different organization shall stand to gain through it.
 Advancement of professional competence in the careers especially related to the areas of
banking and commerce.
Course Material
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Quarterly journals from Institute of Bankers of Pakistan.
SBP’s Latest Prudential Regulations
Handouts
Publications/Journals
© 2013; Department of Finance @ SBE, UMT, Lahore, Pakistan.
Calendar of Activities – SME, Micro Finance & Agriculture Finance Session
Topic
State Bank of Pakistan
1-2
• History
• Functions
Banking Sector Reforms In Pakistan
1. Privatization of Nationalized Commercial Banks
2. Corporate governance.
3. Capital Strengthening.
4. Improving Asset quality.
5. Liberalization of foreign exchange regime
6. Consumer Financing
7. Mortgage Financing
8. Legal Reforms
9. Prudential Regulations
10. Micro financing
11. SME Financing
12. Taxation
13. Agriculture Credit
14. E-Banking
15. Human Resources
16. Credit Rating
17. Supervision and Regulatory Capacity
18. Payment Systems
SME
2
HISTORY, DEFINITION AND REGIONAL CONCEPTS Of SMEs
Concept of Small Business
Characteristics of Small Business
Typical Small Business
Large vs. Small Business
The SME’S in Pakistan
The Government’s Effort towards SME Development
Small & Medium Enterprise Development Authority (SMEDA)
Definitions of SMEs in Pakistan
3
The Role Of Entrepreneurships In SMEs
Imitating Entrepreneurs
Characteristics of Entrepreneurs
Qualities of an Entrepreneur
Kinds of Entrepreneurs
Role of SMEs in a Developing Economy
Pakistan SME
The Development Of SMEs In Pakistan
GOVERNMENT’S EFFORT TOWARDS SME DEVELOPMENT
Provincial Level Institutions
Prudential Regulations for SMEs
4-5
Complete SBP Regulations along with Provisioning and Classification.
© 2013; Department of Finance @ SBE, UMT, Lahore, Pakistan.
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7-8
Problems Faced By SMEs In Pakistan
Why should banks promote SME Financing?
Preferred sectors for SME financing
Marketing for SME loans
Eligibility and evaluation criteria for SME financing
Elements of financing considerations
Monitoring of SME loans
• Relatively informal structure and organization of SMEs
• General lack of financial and managerial expertise, record
keeping and
planning on the part of
their owners
• Danger / problem signs / signals, problem solving / trouble shooting, cautions
& protections
Micro Financing
Microfinance Sector in Pakistan
 History and Evolution
 Types of MF Providers
 Microfinance Banks
 RSPs/NGOs
 Major highlights of the sector
 Comilla Model
Prudential Regulations for Micro Financing
9-10
Complete SBP Regulations along with Provisioning and Classification.
Micro Enterprise Financing
10-11
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Establishing Microfinance Banks as per SBP Directives
Category Of Microfinance Banks
Ineligibility to become sponsors/directors of MBFs
Minimum Capital Requirement
Net worth of sponsor directors of MFBs
NOC for incorporation with SECP
Information/documents to be submitted with the application
Structure of the MFB board
Compliance with legal framework & prudential regulations for MFBs
International Micro Enterprise Financing Institutions
Agricultural Finance
12
Agriculture in Pakistan
 Background of Agricultural Sector of Pakistan
 Land use, farming systems and institutions
 Significance of the agricultural sector in the economy
 Overview of agricultural sector development
Prudential Regulations for Agricultural Finance
Agricultural Credit Department (ACD)
13-14
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Short term / Long term financing
Eligible For Agricultural Credit from the banks
How can a person get agricultural loan from banks
Purposes The Banks Provide Agricultural Credit
Types Of Loans Provided To Farmers/Growers By Banks
© 2013; Department of Finance @ SBE, UMT, Lahore, Pakistan.
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Limit For Agriculture Financing
Areas Covered Under The Agricultural Loans Scheme
Consideration For Size Of Land Holdings
Types Of Land Holdings In Four Provinces
Types Of Sureties / Securities/Collaterals Are Acceptable To The Banks For
Providing Agricultural Credit To Farmers/Growers
Farm Credit – Production Purpose (Short-Term)
Farm Credit – Development Purpose (Medium / Long Term)
Non Farm Credit
Classification & Provisioning in Agri-Financing / Agri-Business.
Securities, Collaterals, Sureties
CIB Report, Charge Creation procedure of Revenue office.
Agricultural Credit Policy
15
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Role of State Bank of Pakistan in Agricultural financing
Supervised Agricultural Credit Scheme 2001
“Revolving Credit Scheme”
Prudential Regulations & Guidelines for Livestock & Fisheries Financing
Purpose-wise & Province-wise Credit Targets
PRESENTATIONS & PROJECT DISCUSSION.
© 2013; Department of Finance @ SBE, UMT, Lahore, Pakistan.