SME, Micro Finance & Agriculture Finance

SME, Micro Finance & Agricultural Finance SME Finance Problems faced by SMEs in Pakistan • Lack of proper infra-structure • Regulatory complexities • Shortage of skilled manpower • Quality control problems • Lack of entrepreneurial expertise • Shortage / irregular availability of financing facilities • Shortage of equity sources • Inability to meet credit criteria / credit conditions • Inadequate bargaining skills / options • Lengthy documentation procedure Why should banks promote SME Financing? • Diversification of the loan portfolio • Boosting the industrialization process • Reducing unemployment • Growth of the export sector • Improving the balance of payment situation • Low loan loss ratio on SME bank deposits / banking services Preferred sectors for SME financing • Export oriented goods and services establishments. • Largely using indigenous technology and resources. • Choices of sub-sectors within each industry. • Up stream/ down stream serving to medium / larger, cottage / heritage industry. Role of Specialized Institutions for Development of SME in Pakistan • SMEDA • Provincial Small Industries Corporation (PSIC) • SBFC & other DFIs • NGOs Sub-contracting to / through SMEs • Special considerations to evaluate finance proposal of sub-contractor • Measures to promote sub-contracting system Organizing a sustainable program for SME financing • Banks to re-focus their financing activities towards the SME sector • Restructuring of lending organization in banks to incorporate SME financing • Making finance available conveniently and speedily Marketing for SME loans • Reluctance of SMEs seek bank financing despite ability to meet credit criteria • Need for creating awareness of desirability for and availability of financing facilities • Proper packaging & marketing of SME financing proposals & developing SME financing schemes / products Eligibility and evaluation criteria for SME financing • A comprehensive, yet simple to use, point-score system to evaluate SME track record and the quality of SME financing proposals • Quality of ownership of prospective borrowing entities • Computerized spreadsheet system to calculate and evaluate key financial ratios, market competition, size, scope & potential of product line Elements of financing considerations • 5Cs / 5Ps of credit. • Operating ratios, debt / equity ratios, risk ratios, marketing / industrial / business norm ratios and / or preferred ratios for SME financing • Security collateral coverage, importance of personal guarantees • SBP lending guidelines, prudential regulations Why Monitoring of SME loans • Relatively informal structure and organization of SMEs • General lack of financial and managerial expertise, record keeping and planning on the part of their owners • Danger / problem signs / signals, problem solving / trouble shooting, cautions & protections Prudential Regulations for SMEs Micro Financing Overview of Micro Enterprise Definition of Micro Enterprise Who are the micro entrepreneurs Business dynamics of a micro enterprise Prospects and challenges for micro enterprises in Pakistani context Role of Micro Enterprise in the Socioeconomic Context • Micro enterprise: A strategy for poverty reduction, socioeconomic empowerment, and gender equality • Scope of micro enterprises in building sustainable industrial and corporate sectors • A review of micro enterprise sector performance and impact on Pakistan’s GDP, Exports, and Employment • Comparative analysis of the micro enterprise models and performance in Pakistan viz. International experiences, such as Japan, Singapore, India, Bangladesh, etc Micro Enterprise Financing Micro Enterprise Financing Scenario in Pakistan • Role of financing in sustainable micro enterprise development • Sources of financing for micro enterprise development: informal money lenders vs. formal sector institutions • Prospects and limitations in accessing financing from the formal sector • SBP micro finance institutions regulations • International micro enterprise financing institutions: performance and impact Micro Enterprise Financing Programs and Products • A review and analysis of formalized micro enterprise financing programs in Pakistan • Micro enterprise financing by banks and specialized MFIs: manifestations, achievements, and challenges • Micro Enterprise Leasing as an Alternate: manifestations, achievements, challenges • Recovery of micro loans: Strategies, prospects, impediments and performance of the formal sector in Pakistan Micro Enterprise Financing Administration • Challenges in attaining sustainability in micro enterprise financing operations • Managing operational cost of micro enterprise financing operations: volume verses pricing strategies • Role of international agencies in the micro enterprise financing and leasing initiatives in Pakistan: Institutional capacity building and Funding financing/leasing operations • Scope of monitoring micro enterprise International Micro Enterprise Financing Institutions • Analysis of the performance, models and programs of international banks and financial institutions engaged in micro enterprise financing • International best practices in micro enterprise financing Agricultural Finance 1. Agriculture in Pakistan • Role of Agricultural Sector in the Economic Development of Pakistan • Problems faced by the Agricultural Sector of Pakistan 2. Agri-business Financial Management • Nature and scope of financial management, managerial goals • Information flows and financial statements • Cost Benefit Analysis of the Agriculture Sector in Pakistan • Input-Output Ratio Analysis in Agriculture Sector of Pakistan • Periodical financial statement, key ratios and break-even analysis • Good Governance in Agri-finance • Analysis & Evaluation of Agriculture and Industrial Inter-relationship 3. Financing Agri-business • Short term / Long term financing • Formulating credit proposal and testing its economic feasibility • Investment analysis; Capital budgeting, Inflation, risk and financial planning • Classification & Provisioning in Agri-Financing / Agri-Business. • Securities, Collaterals, Sureties • CIB Report, Charge Creation procedure of Revenue office 4. Agricultural Credit Market • Analysis of Credit Estimation by Provincial Governments • Sources of agricultural credit (formal and informal) • Role of NGOs and specialized institutions in agricultural lending • Cooperative financing • Corporate financing • Contract farming Methods & Procedures • Group lending system, Methods & Procedures 5. Agricultural Credit Policy • Role of State Bank of Pakistan in Agricultural financing • Supervised Agricultural Credit Scheme 2001 • Mandatory Credit Targets for Banks • Revolving Credit Scheme • Prudential Regulations for Agricultural Credit • Purpose-wise & Province-wise Credit Targets