State Bank of Pakistan

04/05/2021 | Press release | Distributed by Public on 04/06/2021 07:26

IH&SMEFD Circular No. 06 of 2021 - Amendment in Prudential Regulations for SME Financing

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.
  1. 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 Assets

Rescheduling/ 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'.
  1. Updated copy of Prudential Regualtions for SME financing also incorproating above amendment is attached
    as    Annexure-1.
  2. 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.
Encl:Annexure-1 Prudential Regulations for SME Financing



Sincerely yours,
-Sd/-

(Dr. Mian Farooq Haq)
Director