SBP rolls out financing framework for SEs and SFs
KARACHI: The State Bank of Pakistan (SBP) has introduced a financing framework for Small Enterprises (SEs) and Small Farmers (SFs) under wholesale and agency arrangements to further improve their access to credit under the government’s Risk Coverage Facility. The banks may provide financing to SEs and SFs through wholesale and agency arrangements. The framework aims to facilitate financing…
The State Bank of Pakistan (SBP) has unveiled a financing framework designed to enhance credit access for Small Enterprises (SEs) and Small Farmers (SFs) through wholesale and agency arrangements. This initiative is part of the government's Risk Coverage Facility, aiming to expand financing options for these entities under prescribed eligibility criteria, lending limits, and risk management requirements.
Under this framework, Participating Financial Institutions (PFIs) and Authorized Financial Institutions (AFIs) are encouraged to collaborate. PFIs may partner with Microfinance Banks, Non-Banking Microfinance Companies (NBMFCs), and Non-Bank Finance Companies (NBFCs), known as Agent Financial Institutions (AFIs), to provide financing services.
AFIs will be entrusted with loan origination, appraisal, approval, monitoring, recovery, and reporting. Loans can be recorded directly in PFIs' books or through API-based integration, ensuring traceability and transparency. The maximum financing limit for SEs under the framework is set at Rs1 million for NBMFCs and Rs5 million for NBFCs and MFBs. For agricultural borrowers, the limits are Rs500,000 for NBMFCs and Rs2 million for NBFCs and MFBs.
PFIs will select AFIs based on stringent eligibility criteria, such as operational self-sufficiency, low non-performing loan ratios, relevant experience, and compliance with capital adequacy and risk management standards. AFIs must meet stringent requirements, including sound governance, robust anti-money laundering and counter-terrorism financing (AML/CFT) compliance, and a functional internal audit system.
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