91% of the loans under the scheme were provided to small businesses with less than five employees of which 90% were sole proprietors. PHOTO: FILE
ISLAMABAD: The State Bank of Pakistan’s (SBP) Credit Guarantee Scheme (CGS) helped small enterprises and farmers to access Rs2.83 billion in bank financing over the last 18 months.
The CGS had facilitated financing in 105 districts across the country with 85% of loans provided to previously un-served/underserved clients in rural areas, of which 81% were subsistence farmers, said a statement issued by the central bank. Similarly, 91% of the loans under the scheme were provided to small businesses with less than five employees of which 90% were sole proprietors.
Under the CGS, banks also focused on serving the lower end of the commercial banking market through smaller loans, with an average loan size of Rs390,000 for agriculture and Rs2.1 million for small enterprises. Based on client needs, the loan tenor under the CGS ranged from less than a year to three years.
The scheme through its support to previously unbanked small rural enterprises was likely to further enhance economic opportunities and increase employment in the rural areas of the country.
The technical committee during its annual review of the scheme observed that despite the extensive geographic spread and a focus on under-banked segments, the participating banks demonstrated prudent lending practices reflected in an infection ratio of only 2.91% for agriculture and 1.07% for small enterprise loan portfolios, which were much lower than the industry averages.
Published in The Express Tribune, February 21st, 2013.
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