DEVELOPMENT FINANCE
SME FINANCE
SME is one of the important sector of domestic economy and plays essential role in promoting inclusive and sustainable economic growth, provides employment, fosters innovation and reduces income inequalities. Nevertheless, SMEs are facing traditional problems of financing slackness, difficulties in exploiting technology, constrained managerial capabilities, low productivity and regulatory burdens. Though some of the countries across the world are successful to overcome these obstacles and to boost SME sector, developing countries -including Pakistan- has yet to reap benefit from the sector. In order to exploit full potential of the sector, there is a need to develop an amiable environment for sustainable growth in SME Sector and to adopt policies to smoothen the way for financial inclusion of the sector. Keeping in view the importance of the sector and essential contribution in the economy, SBP took several policy measures for the enhancement and reinforcement of this sector. This also include “The Capacity Building & Awareness Creation” among the banking officials as well as SME traders, service providers and manufacturers.
Keeping in view the importance and potential of priority sector, NIBAF is organizing a number of training programs on different aspects as well as awareness sessions for the banks’ officials across the countries since 2018. Experienced bankers & professionals conducted these sessions. Training delivery comprised of presentations, interactive trainers sessions, group/ individual exercises and case studies etc. The objective of these programs were to enhance understanding of the participants regarding prudential regulations specifically developed for SME financing and SBP various subsidized refinance & credit guarantee schemes.
SME regulatory framework and refinance schemes - the objective of these programs were to enhance understanding of the participants regarding prudential regulations specifically developed for SME financing and SBP various subsidized refinance & credit guarantee schemes. The participants took interest in these programs by asking questions on different aspects of SBP schemes and got clarity on various PRs. The trainers/SBP officials clarified the importance of these schemes besides discussion on business potential for banks, employment generations and contributions towards economic growth.
Product Development & Program-based Lending - product developments and innovations are key aspects for the growth and sustainability of any business and banking business is not an exception. There is a need to enhance human capacity by imparting such skills and techniques that would help the banking business to expand by engaging potentials clients in all the sectors. Keeping in view this important feature, NIBAF designed a customized training program on Product Development & Program-based Lending.
Training programs for relationship managers and branch managers - Assessment of client is the pre-requisite for disbursing any banks financing, where a banker requires evaluating customer’s ability and willingness to pay. Such assessment needs coherent understanding and financial acumen using various techniques. However, it become more imperative in case of loan disbursement to a small enterprise with no or little financials, where such assessment become an art than simple financial analysis. To develop such skills, NIBAF designed training programs for relationship managers and branch managers.
AGRICULTURE FINANCE
Agriculture sector remained top priority among the policy makers primarily due to food security and employment generation. Over the period, there are significant changes in agri and agri-related allied business including farm mechanization, tunnel farming, drip irrigation, water pumping using solar panel, and crop management & monitoring using drone etc. These innovations have created lucrative opportunities for the banks to tap potential of this segment and direct agri-credit to innovative borrowers.
However, Agri-sector is facing traditional difficulties including lack of financing from formal sources, inability to exploit modern farming technology & techniques, poor water infrastructure and management, deficient food preservation and processing. SBP is taking various initiatives and measures in order to address these shortcomings and promote agriculture credit. This requires thorough understanding of agri sector and various measures taken by SBP.
To accelerate the efforts further and increase banks’ outreach to borrowers in the Agri sector, NIBAF in collaboration with SBP has initiated an extensive capacity development programs for banks in this area for the last two years. These programs aim to equip banks with necessary tools and techniques for serving the subject priority sector more effectively and efficiently.
Credit Risk & Security Documentation for agri-officers of banks - The objectives of this program is to develop understanding of banks’ officials regarding credit risk, need of securitization in agri-lending, legal concepts of various assets & underlying securities, significances and legal aspects of documentation. For any credit underwriting, it is important to determine borrower capacity and willingness to pay. The credit officers ensure pre-requisite of credit proposal that include credit history of the borrower, visiting borrower’s place/business, vetting all the documents to establish title genuineness, cash flow analysis, evaluation of loan-size & its purpose, loan price and duration etc. The officials should understand various type of assets/properties, their nature, legal attributes, legal entitlement that constitute security and collateral. These training programs also discussed various revenue documents, related Acts, Articles & Clauses, passbook & its attributes; land Record Management Information System (LRMIS), types of charges, personal guarantees etc.
Agri-lending techniques - the objective of this program is to enhance skill set of banking officials in order to undertake marketing and sale of agri-product in effective and efficient manner. It is important for banks officials to understand agriculture & agri-related business and develop agri-financing products. This training program discusses various types of agri-financing and matching potential customers along with risk profiling, assessment and understanding of requisite documents. The course also highlights various financing products and SBP Re-finance & Credit-guarantee schemes. Conducting marketing survey, identification of competitive advantage, understanding marketing cycle & segmentation are vital for developing and building customer relationship. This strategy helps in planning for selling banking product in efficient way. Participants were assigned tasks to develop marketing strategy for selling banking products and to present in-group.
Agri-value chain financing - value chain financing is an important business avenue that provides opportunity for banks to explore and develop their products due to associated lower cost and risk. In well-integrated value chain system, businesses linked to a lead firm with a reliable market or established market linkages and banks can exploit this strong relationship by financing potential customers. To venture in value chain financing, banks, however, needs relevant skills and techniques and NIBAF creates such learning opportunity by designing customized training program on Agri-value chain financing.
Remedial Management in Agri-finance - The objective of the course is to highlight the significance of credit monitoring and to recognize & evaluate problem loans. It also discusses causes of default and its impact on overall loaning portfolio. The program also explains various type of risks & their evaluations in terms of obligors, size and pricing of the loan. Understanding of early warning signal, underlying security, collateral & various guarantees, evaluation of repayment flows are the different aspects of the program. The participants took active participation in the training program and got clarity on risk assessment and remedial management.
MICROFINANCE
SBP envisions the significant role of micro-finance in the sustainable economic growth of the country that is necessary for livelihood creation and poverty eradication from the grass-root level. In line with SBP Strategic Vision and National Financial Inclusion Strategy, NIBAF designed a number of fully funded customized training programs for Micro-finance banks. The purpose of these trainings is to develop human resource capacity and enhance understanding of MFBs officials regarding financial and operational aspects of micro financing besides customer engagements, assessment and risk mitigation. While developing these customized trainings, NIBAF also consulted with MFBs in order to cater their training needs and to maximum learning benefits from these programs. Besides, it also emphasized the importance of a developing strategy for small businesses and improving access to finance.
Credit Initiation Techniques for officials of Microfinance banks - risk assessment and mitigation are important feature of any lending business. This requires thorough understanding of risk types and its application in order to insulate a lender from the possible risks arising out of lending business particularly micro lending. Further, proper risk management is usually exhibit in typical loan cycle and this requires continuous interaction with the obligor(s). Keeping in view this important aspect, NIBAF has designed training program on Risk Management and Credit Initiation Techniques for officials of Microfinance banks.
Remedial Management in Micro-financing - micro-finance banks extend small loan to potential borrowers that warrant continuous monitoring and interaction with the respective borrower(s). Understanding of early warning signal, underlying security, collateral & various guarantees, classification of loan as per PR, evaluation of repayment flow etc. are the essential aspects of post loan monitoring. Now to equip the banking officials regarding these aspects, NIBAF has designed a training program on Remedial Management in Micro-financing.
Techniques to Increase Sales volume of Micro Finance - understanding of human financial needs and converting it into tangible financial products with appropriate marketing is one of the core function of any bank. This requires proper know how of organization structure, consumer insights, product developments, marketing research and regulatory framework. NIBAF is in forefront to develop such skills and assist the bankers to design banking products that facilitate the potential consumers. In view of that, NIBAF has developed a training program on Techniques to Increase Sales volume of Micro Finance.