a view to motivate the banks to lend to borrowers, which
would not have access to credit under normal circumstances,
State Bank has launched the Credit Guarantee Scheme
(CGS) for Small and Rural Enterprises with the assistance
of Government of Pakistan and donor agencies.
The Scheme would allow the banks to develop a portfolio
of fresh borrowers who are creditworthy, but cannot
fit into their usual credit parameters, especially when
collaterals are required. It will allow banks to assess
Small and Rural Enterprises on the basis of Cash Flows.
Further, the Scheme should not be construed as a permanent
source of support; rather an opportunity for the banks
to make necessary alignments in strategic direction
and meet SME financing needs on a sustainable basis.
The Scheme has been bifurcated into two segments-One
for NWFP, FATA and Gilgit-Baltistan; whereas the other
is reserved for priority clusters/areas of other parts
of the country. The eligible Participating Financial
Institutions (PFIs) will be allocated limits, wherein
SBP will share bonafide losses on the loans to the extent
of 60% of PFI’s fresh portfolio of financing to
Small & Rural Enterprises. In NWFP, FATA and Gilgit-Baltistan,
all banks would be eligible to apply for limits, while
for other areas; few banks will be selected as PFIs.
The banks are, therefore, advised to apply for status
of PFIs after which limits will be allocated to selected
PFIs as per criteria outlined in the scheme.
The Credit Guarantee Scheme is attached as Annexure-I
while the Standard Operating Procedures (SOPs) of the
Scheme are placed at SBP Website
I: Credit Guarantee Scheme
for Small & Rural Enterprises
• Standard Operating Procedures