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The Habib Bank Limited (HBL) logo is seen on the head office building in Karachi, Pakistan, April 18, 2016. — Reuters
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KARACHI: One of Pakistan’s largest lenders, Habib Bank Limited, sees interest rates as an important assistance for small and medium -sized businesses (SMEs), a favorable regulatory environment and a favorable regulatory environment (SMEs).
“HBLSME recognizes the immense potential of the class and sees an intelligent future for it. Progressive economic climate offers a favorable opportunity for development,” HBL said in a written response to questions sent by the news.
“The declining markup rates create a conducive environment to promote business, with a permanent improvement economy. The bank added that the regulatory framework in Pakistan supports the development of SME, which promotes more more worthy environment for running and growing these businesses.
Private sector credit growth suffered a decline in fiscal year 23, mainly due to record high interest rates and economic activity. However, in the fiscal year 24, the private sector’s credit extension has improved, which led to the rehabilitation of economic activity, inflation and low interest rates. In addition, banks were working to improve their advance to deposit (ADR) proportion to avoid more taxes on government securities. However, at the end of December last year, the government waived the ADR tax condition.
In January, the State Bank of Pakistan (SBP) reduced its benchmark interest rate from 100 points (BPS) to 12 percent. This reduction reduces the total borrowing costs to 1,000bps since June 2024.
Pakistan’s annual inflation rate in February has dropped 1.5 percent, the lowest level in about a decade, which is a significant decline in May 2023 by 38 percent.
Currently, the South Asian country has a $ 7 billion bailout support from the International Monetary Fund, which was approved in September. The government attributes the trend below the inflation to the economic stability measures implemented under the IMF Loan Program.
“There is no doubt that SME financing is ready to see the permanent rise of landscape. HBL is committed to supporting the development and development of SMEs in Pakistan, “said Aamir Korashi, head of products, transactions services, and solutions in HBL.
“We have the biggest loan to lend over Rs 1220 billion to this section of the economy in the country. Moving forward, HBL will continue to play an important role in empowering this important sector and advancing economic progress in the country,” earlier, the bank, agriculture, and SME banking portfolios.
Small and medium -sized businesses play an important role in running economic growth and employment opportunities in Pakistan. These businesses need access to cheap credit and payment solutions to support their development and expansion. However, many SMEs face challenges in obtaining financial support through formal channels due to vast documents needed to qualify for inadequate collateral and bank loans.
Access to proxy data is a cause for concern, as banks mainly rely on documents rather than original equipment. As a result, many businesses refer to informal sources of credit, which are often considered as easy options with less document requirements.
Currently, there are about five million SMEs operating in Pakistan, which consumes about 80 % of non -agricultural labor strength. These businesses contribute 40 % of the country’s GDP and 25 % of total exports. According to SBP data, only 155,000 SMEs – which are only equal to 3.0 % – currently receive financial support from the banking sector. In Pakistan, banks’ borrowing portfolio has a heavy weight towards corporations, which is about 74 % of the total loan. In contrast, only 5.0 % of the loans are extended to SMEs. As of December 2024, SME finances reached Rs 6638 billion, which increased from Rs 543 billion last year.
Next year, the HBL strategy to enhance its SME loan portfolio is to expand centers around centers to expand its wider network, invest in capacity construction and tackle key challenges. The bank has a nationwide presence with more than 1,700 branches and has a dedicated network of more than 250 SME relations managers, which has solved the unique business needs of the country. Its comprehensive product suite includes working capital, trade, supply chain financing, and more, which is to effectively meet the diverse needs of SMEs.
To identify the increasing and widespread need of the sector for the unusual SME market and to identify the widespread requirements of this sector, the bank is ahead of the industry in solving this important issue facing the business in search of traditional loans: suicide attack requirements. According to the bank, it developed an easy finance, a cash flow and a suicide -free financing product, which opened the loan space in a segment of SME’s place. In addition to the implementation of the Kosi-Nakam model to rapidly evaluate the customer financial health, HBLSME conducts strong risk management using advanced credit models in banking shape score cards. The use of these models not only facilitates fast and easy credit approval, which increases the productivity of the front and team, but also offers the important benefits of consumers by reducing the document requirements and reducing processing time.
The recently launched by the SBP, the national financial inclusion strategy (NFIS) 2024-28 aims to develop a digital environmental system to financing SME. NFIS encourages banks to digitalize their loan application process and credit management system. It also promotes the adoption of technology to use the score card -based financing and supply chain.
