Prudential Regulations for Small and Medium Enterprises Financing
PRUDENTIAL REGULATIONS FOR SMALL AND MEDIUM ENTERPRISES FINANCING
BANKING POLICY AND REGULATION DEPARTMENT
STATE BANK OF PAKISTAN
THE TEAM
NAME
DESIGNATION
TELEPHONE NO. & E-MAIL
Muhammad Kamran Shehzad Syed Irfan Ali Inayat Hussain Mohsin Rasheed Allauddin Achakzai
Executive Director Director (BP & RD) Director (BID) Joint Director Jr. Joint Director
(92-21) 9212512 kamran.shehzad@sbp.org.pk (92-21) 9213580 syed.irfan@sbp.org.pk (92-21) 9211059 inayat.hussain@sbp.org.pk (92-21) 9212434 mohsin.rasheed@sbp.org.pk (92-21) 2453519 allauddin.achakzai@sbp.org.pk
Website Address:
www.sbp.org.pk
CONTENTS
PART-A PART-B Regulation R-1
Definitions. Regulations. Sources and capacity of repayment and cash flow backed lending. Personal guarantees. Limit on clean facilities. Securities. Margin requirements. Per party exposure limit. Aggregate exposure of a bank / DFI on SME sector. Minimum conditions for taking exposure. Proper utilization of loan. Restriction on facilities to related parties. Classification and provisioning for assets. -
9 15 15 15 15 16 16 16 17 17 18 18 18 23-33
Regulation R-2 Regulation R-3 Regulation R-4 Regulation R-5 Regulation R-6 Regulation R-7
Regulation R-8 Regulation R-9 Regulation R-10 Regulation R-11 Annexures
PREFACE Keeping in view the important role of Small and Medium Enterprises (SMEs) in the economic development of Pakistan and to facilitate and encourage the flow of bank credit to this sector, a separate set of Prudential Regulations specifically for SME sector has been issued by State Bank of Pakistan. This separate set of regulations, specifically tailored for SMEs, is aimed at encouraging banks / DFIs to develop new financing techniques and innovative products which can meet the financial requirements of SMEs and provide a viable and growing lending outlet for banks / DFIs. Banks / DFIs should recognize that success in SME lending requires much more extensive involvement with the SMEs
BANKING POLICY AND REGULATION DEPARTMENT
STATE BANK OF PAKISTAN
THE TEAM
NAME
DESIGNATION
TELEPHONE NO. & E-MAIL
Muhammad Kamran Shehzad Syed Irfan Ali Inayat Hussain Mohsin Rasheed Allauddin Achakzai
Executive Director Director (BP & RD) Director (BID) Joint Director Jr. Joint Director
(92-21) 9212512 kamran.shehzad@sbp.org.pk (92-21) 9213580 syed.irfan@sbp.org.pk (92-21) 9211059 inayat.hussain@sbp.org.pk (92-21) 9212434 mohsin.rasheed@sbp.org.pk (92-21) 2453519 allauddin.achakzai@sbp.org.pk
Website Address:
www.sbp.org.pk
CONTENTS
PART-A PART-B Regulation R-1
Definitions. Regulations. Sources and capacity of repayment and cash flow backed lending. Personal guarantees. Limit on clean facilities. Securities. Margin requirements. Per party exposure limit. Aggregate exposure of a bank / DFI on SME sector. Minimum conditions for taking exposure. Proper utilization of loan. Restriction on facilities to related parties. Classification and provisioning for assets. -
9 15 15 15 15 16 16 16 17 17 18 18 18 23-33
Regulation R-2 Regulation R-3 Regulation R-4 Regulation R-5 Regulation R-6 Regulation R-7
Regulation R-8 Regulation R-9 Regulation R-10 Regulation R-11 Annexures
PREFACE Keeping in view the important role of Small and Medium Enterprises (SMEs) in the economic development of Pakistan and to facilitate and encourage the flow of bank credit to this sector, a separate set of Prudential Regulations specifically for SME sector has been issued by State Bank of Pakistan. This separate set of regulations, specifically tailored for SMEs, is aimed at encouraging banks / DFIs to develop new financing techniques and innovative products which can meet the financial requirements of SMEs and provide a viable and growing lending outlet for banks / DFIs. Banks / DFIs should recognize that success in SME lending requires much more extensive involvement with the SMEs
References: As above Note: The benefit of FSV is allowed against NPLs of over Rs 5 million only and from December 31, 2006 against NPLs of over Rs 10 million only