Business

Total financing: SMEs’ share amounts to Rs260.8 billion

Figure up 3.2% at June-end, number of borrowers increases 14.6%

Our Correspondent October 05, 2015 1 min read

A file photo of State Bank of Pakistan. PHOTO: EXPRESS

KARACHI: Outstanding financing for small and medium enterprises (SMEs) amounted to Rs260.8 billion on June 30, up 3.2% from a year ago.

According to SME financing statistics issued by the State Bank of Pakistan (SBP) on Monday, its share in total financing stood at 5.4% at the end of the second quarter of 2015. In spite of an increase in absolute terms over the year, the share of SME financing in total financing has shrunk from 5.8% on June 30, 2014.

In view of the prudential regulations, a small enterprise is a business entity which employs a maximum of 20 people and boasts an annual turnover of up to Rs75 million. As for medium enterprises, the maximum number of employees is 250 for manufacturing and services sectors, with an annual turnover of up to Rs400 million. Medium enterprises in the trading segment can have a maximum of 50 employees though.

The number of SME borrowers increased by almost 14.6% on a year-on-year basis to 152,495 on June 30. The increase in the number of borrowers was 5% over the previous quarter, SBP data shows.

Non-performing loans (NPLs) in the SME sector declined 4.3% on an annual basis to Rs81.7 billion at the end of June. The decrease in NPLs was only 0.44% on a quarterly basis.

A sector-wise breakdown of outstanding SME financing shows that the share of trading was 39% followed by manufacturing (38%) and services (23%) sectors. In terms of loan size, SBP data shows advances of up to Rs3 million had 27% share in total SME financing at the end of June. They covered 89% of total SME borrowers while a major number of them availed loans of up to Rs0.5 million.

Advances of over Rs3 million and up to Rs20 million had a share of 39% in total financing while advances of over Rs50 million represented 14% share in total financing, according to the SBP.

Seventeen private-sector banks had the highest share (69%) in outstanding SME financing at the end of the second quarter of 2015. Private banks were followed by public-sector banks, whose share stood at around 25% in total SME financing.

Conventional banks hold a 90% share in SME financing while only 10% financing is provided by Islamic banking institutions, SBP data shows.

Published in The Express Tribune, October 6^th, 2015.

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