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Credit Guarantee Scheme for Small and Rural Enterprises

State Bank of Pakistan (SBP) in collaboration with the Federal Government and UK’s Department for International Development (DFID) has launched a Credit Guarantee Scheme (CGS) for Small, Rural and Micro Enterprises. This Scheme is aimed at helping micro and small enterprises to easily obtain credit from banks.
Key features of this Scheme are as follows:

  • a) Available Banks / Financial Institutions (PFIs) +

    The State Bank of Pakistan has been operating Credit Guarantee Scheme with the following Financial Institutions:

    Faysal Bank

    Muslim Commercial Bank

    Bank Alfalah

    Bank of Khyber

    Sindh Bank

    Allied Bank Limited

    Askari Bank

    Habib Bank Limited

    Advans Microfinance Bank Limited

    First Women Bank Limited

    FINCA Microfinance Bank Limited

    Meezan Bank

    National Bank of Pakistan

    United Bank Limited

    Tameer Microfinance Bank Limited

    Al Baraka Bank

    Pak Oman Microfinance Bank Limited

    Dubai Islamic Bank Pakistan Limited

    SME Bank

    U Bank

    Bank Islami


    Further, PFIs for the modified scheme will be notified as finalized.

  • b) Eligibility of Borrowers +

    Borrowers under the Scheme will be micro and small enterprises and farmers with economic landholding.

    The borrower shall preferably be a fresh customer; however, an existing borrower can also be extended additional lending facility under the Scheme.

    The selection criteria for eligible borrowers will include:

                           i.         Regular and estimable positive cash flows to ensure ability of debt servicing

                          ii.         Conformance to Prudential Regulations for SMEs/Agri/Micro Financing

                         iii.         Clean e-CIB record

  • c) Risk Coverage +

    60% risk coverage shall be provided for loans extended to: Start-up businesses, Women borrowers, and Small and Rural enterprises operating in under-served areas of the country.

    For eligible borrowers, other than those mentioned above, the risk coverage to PFIs shall be linked with the value of the underlying collateral and shall operate in the following manner:

                           i.         60% for Clean Lending

                          ii.         40% Value of Collateral up to 100% of loan

                         iii.         20% Value of Collateral Greater than the Loan Amount

    In cases, where a loan falls in two categories, higher risk coverage shall prevail.

  • d) Mark – up / Interest Rates +

    SMEs will be charged market-based mark-up rate under the Scheme.

    However, in cases where SBP has provided a refinancing facility, mark-up rate allowed by SBP to PFIs under the particular facility shall prevail.

  • e) Loan Limit +

    Small Enterprises (as defined by SME Prudential Regulations) may be extended financing for a maximum tenor of 5 years and upto the maximum amount allowed under SBP’s Prudential Regulations for Small Enterprises.

    Microfinance Banks may extend loans from Rs. 150,000 to Rs. 500,000 to Micro Enterprises for a tenor not exceeding 5 years.

    Farmers may be extended financing under the Scheme upto the maximum amount of Rs 2 Million. The maximum loan tenor allowed for the purchase of tractors and other agri loan implements under the Scheme is 5 years. However, the aggregate financing under this category shall not exceed 20% of the total allocated guarantee limit of the bank. For purchase of agri inputs, maximum loan tenor under the Scheme is 3 years.

  • f) Contact Information +

    You may contact SMEDA helpdesk for queries or information, if any, regarding the Credit Guarantee Scheme offered by the State Bank of Pakistan.

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