The State Bank of Pakistan’s (SBP) Credit Guarantee Scheme (CGS) has helped small enterprises and farmers to access Rs 2.83 billion in bank financing over the last 18 months.
The Scheme (CGS) has facilitated financing in 105 districts across the country with 85 percent of loans provided to previously un-served/under-served clients in rural areas, of which 81 percent were subsistence farmers, said a SBP press statement on Wednesday.
Similarly, 91 percent of the loans under the Scheme were provided to small businesses with less than five employees of whom 90 percent were
Sole proprietors the statement added.
Under the CGS, banks also focused on serving the lower end of the commercial banking market through smaller loans, with an average loan size of Rs 390,000 for agriculture and Rs 2.1 million for small enterprises. Specific to the needs of the clients, the durations ranged from less than one year to three years.
The Scheme through its support to previously un catered small rural enterprises is likely to enhance economic opportunities and increase employment in the rural areas of the country.
The Technical Committee of the bank during its annual review of the Scheme observed that despite the extensive geographic spread and a focus on under-banked segments, the participating banks demonstrated prudent lending practices reflected in an infection ratio of only 2.91 percent for agriculture and 1.07 percent for small enterprise loan portfolios, which are much lower than the industry averages.
It shall be noted that the CGS is monitored by the Technical Committee drawing membership from the UK’s Department for International Development (DFID), SBP and the Pakistan Banks Association (PBA).
The Scheme is working in tandem with nine banks including big five banks which were selected after due screening by the Committee.