Issuing the Amendment in the Prudential Regulations for SME Financing, the State Bank of Pakistan (SBP) has now allowed banks/DFIs to use credit information reports of private credit bureaus to further facilitating SME financing by providing enabling regulatory environment.
In order to facilitate banks/DFIs for SME financing, the amendment says that while considering any credit proposal (including renewal, enhancement and rescheduling/ restructuring), banks/DFIs shall obtain e-CIB report on their prospective borrower(s) from Electronic Credit Information Bureau (e-CIB) of State Bank of Pakistan or any Credit Information Bureau licensed and regulated by the SBP. Banks & DFIs shall give due weightage to the credit report relating to the borrower(s) and concerned group. However, they can take exposure on defaulters keeping in view their risk management policies and criteria, provided they properly record reasons and justifications in the approval form. The actual circular of the State bank of Pakistan reference IH&SMEFD Circular No. 06 of 2021 is stated below:
| IH&SMEFD Circular No. 06 of 2021 | April 05, 2021 |
The Presidents / CEOs All Banks/ DFIs Dear Sir/Madam, Amendment in Prudential Regulations for SME Financing Please refer to IH&SMEFD Circular No. 09 dated December 22, 2017 on the above subject.With a view to further facilitate SME financing by providing enabling regulatory environment, banks /DFIs are allowed to use credit information reports of private credit bureaus licensed by SBP. Keeping this in view, following amendments in regulations under Prudential Regulations (PRs) for SME Financing have been made:Regulation SME R-2: Electronic Credit Information Bureau (e-CIB) Report While considering any credit proposal (including renewal, enhancement and rescheduling/ restructuring), banks & DFIs shall obtain e-CIB Report on their prospective borrower(s) from Electronic Credit Information Bureau (e-CIB) of State Bank of Pakistan or any Credit Information Bureau licensed and regulated by SBP. Banks & DFIs shall give due weightage to the credit report relating to the borrower(s) and concerned group. However, they can take exposure on defaulters keeping in view their risk management policies and criteria, provided they properly record reasons and justifications in the approval form. Regulation SE R-9: Restructuring/ Rescheduling of Loans/ Advances iii. While reporting to the Credit Information Bureau (e-CIB) of State Bank of Pakistan or any Credit Information Bureau licensed and regulated by SBP, such loans/ advances may be shown as ‘rescheduled/ restructured’ instead of ‘default’.Regulation ME R-5: Classification and Provisioning for AssetsRescheduling/ Restructuring 4. Banks & DFIs shall ensure that Rescheduling is not done simply to avoid classification. While reporting to the Credit Information Bureau (e-CIB) of State Bank of Pakistan or any Credit Information Bureau licensed and regulated by SBP, such loans/ advances may be shown as ‘rescheduled/ restructured’ instead of ‘default’. Updated copy of Prudential Regualtions for SME financing also incorproating above amendment is attached as Annexure-1. Above changes in regulations are applicable with immediate effect. Banks and DFIs are advised to ensure circulation of these regulations among all their offices/ branches for meticulous compliance in letter and spirit. Non-compliance of Prudential Regulations will lead to punitive action under the relevant provisions of BCO, 1962. |
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