Professional Documents
Culture Documents
Medium
Enterprises
Medium Enterprises
Small Enterprises
Small
Enterprises
Agri
Agri
Micro
Micro
Employs 75%
Contributes Over 3
- 80% of
25% of Million
non-
export SMEs in
agricultural
But ..
earnings Pakistan
workforce
Employs
almost 45%
of total
workforce
Only 8 – 9% of the
total private sector
lending is deployed
in SME Sector
Why SMEs are Discouraged?
Demand Constraints Supply Constraints
Borrowers hesitant to borrow from banks, preferring High NPLs in the sector (31.8% of the borrowers)
equity financing from other sources (acquaintances, has resulted in a flight to quality for Banks which has
private investors) instead of debt financing saturated the large corporate segment
Smaller size of operations and irregular cashflows Banks following a 100% secured lending model to
result in a reluctance to risk collateral with Banks minimize risk. Many businesses are unable to offer
the required collateral
Limited management capability and multiple book High search costs for Banks in terms of information
keeping results in an inability to borrow through acquisition and lack of credible data on market
Banks potential and opportunities
Infrastructural constraints like power, labor, A high percentage of Banks do not offer a
technology and law & order situation inhibit access differentiated customer value proposition with
to finance tailored SME Transactional, asset and liability
products
Bank Alfalah is focused at providing financial solutions to
assist SMEs during the incubation period; focusing on
complete financial and non-financial needs of the company
Incubator Successful and Established
Commercial Entity
Since inception of any SME it OR
5-7 Years
faces daunting challenges
Failed Business
Propositions
*Source: IFC Analytics, SBP
SME Banking Transformation
Year 2012 Year 2014 onwards
Value Chain
Almost Almost Financing
11,000 280,000 of
customers BAFL
with customers,
Lending and the Business Advisory
Relationship potential Manager
market
Wealth Management,
Digital Banking &
Investment and Financial
Transactional Needs
Advisory Needs
Transactional
Liabilities
Flow
Not always a
starting point for
New
Payroll and Cash Relationships
Financial Needs
Management Needs
SME Banking
Transformation
SME Active Work Streams
1 2 3 4 5 6
SME Non Human Business
Relationship Credit
Product Financial Capital Analytics
Based Approval
Suite to be Advisory and
Model Process
Enhanced Services Monitoring
Integrating the
Value Chain Branch Led Delegated SME Business
Verticals SME Tool Kit Credit Certification
Sales Model Dashboard
Approval
Structure
BAM
Sector Based RM Business Certification SME Business
products and Productivity Advisory Streamlined Monitoring
Services Model Managers Policy and Pack
Process
Manuals Staff
Engagement
Cash-flow and
based unique 360 Degree Seminars and Automation of
Agenda Workshop Collection and Performance reporting
Product Recovery Matrix
Propositions
Alfalah Turning the Wheel for SMEs…
Transactional
Account
Complete
Lending financial and non-financial
• Evaluatesolutions forProducts
the Needs of all theand
agents in for
Services theSpecific
valueValue
chain
Chain
Solution Agents
through leveraging the anchor relationship.
Value Chain • Increase Financial Coverage for NON BAFL Value Chain Agents and
Conversions increase Product Per Customer
Product Ideology
Unsecured Financing
Consultants – 32%
Key impediment for SMEs is lack of management capability due to knowledge/skill gap
In its continuous commitment to provide sustainable solutions, Bank Alfalah has initialed its Non Financial Advisory
Program to provide businesses with key management tools and solutions
• Information
STRATEGY • Knowledge Sharing Events
• Advisory (Business Advice Managers)
Product Overview
www.pakistan.smetoolkit.org
The SME Toolkit
Video Tutorials:
New category with 12 e-learning videos added on
the SME Toolkit.
Content Translation:
Urdu translation of 42 global content items
sourced from SMEDA and uploaded on the SME
Toolkit.
Islamabad
• 12 Events conducted in major commerce Rawalpindi
chambers and trade bodies Sialkot
• Connected with 1,000+ business owners Gujranwala Kamoke
Roadshows
Trade Associations
• Collaboration with The Indus Entrepreneurs (TiE)
Entrepreneurial Bodies
and Enclude to provide financial training to
Entrepreneurial entrepreneurs on ‘Access To Finance” Educational Institutions
Bodies
• 4 seminars conducted
• 350+ aspiring entrepreneurs touched
Business Advice Manager (BAM) Program
BAM Program:
All BAMs will work closely with their existing SME Customers to
assess the need of Business Advisory and provide necessary
guidance and will evaluate the performance.
Thank You !!