Karachi (Muhammad Yasir)
Top representatives from the banking and fintech sectors
along with state regulators gathered to discuss ways and suggest
implementable solutions to digital based financing for supply chains
for small and medium enterprises and the agriculture sectors at the
5th DigiBAP Summit 2024 on Monday at a local hotel. The summit
featured panel discussions and presentations by leading bank
presidents and CEOs as well as senior executives on issues such as
Financing the Future, Digital SME Lending, Strategies for Digital
Supply Chain Financing, and Future of Digital Lending.
Speaking as chief guest at the 5th DigiBap Summit 2024, Deputy
Governor, State Bank of Pakistan (SBP), Saleem Ullah said that ease in
access to finance for the SME sector is the priority area for the
government and all banks need to create the requisite infrastructure
and systems to extending digital financing solutions for supply chains
of SMEs. He lamented that currently less than 5% commercial funding is
extended to the crucial SME sector. The summit was organized and
hosted by Terrabiz in collaboration with Dukan.
SBP’s 5-year strategic plan calls for doubling the size of credit to
SMEs to Rs. 1,100 billion and increasing the borrowers 150,000 small
businesses. For this we need to accept SMEs as a profitable business
segment. Saleem Ullah asked banks to develop their working plans for
this end and share those plans with SBP. SME along with Agriculture
and IT remain priority sectors and the PBA has made task forces on
this. These sectors require concrete measures on real commercial lines
and not just lip service or subsidies.
The Deputy Governor also said that banks need to properly leverage
technology to meet targets, reduce bank costs, and increase access. We
have global examples for this including some in Pakistan as well. SBP
has extended a challenge fund to start-ups for SME and DSC financing
and good options had emerged. He stressed the need to improve on
synergies to reduce cash circulation, digital payments, digital
banking and the overall digital banking eco-system. Raast with 37
million digital accounts and Rs. 15 trillion in transactions has been
a game changer in digital banking.
Chairman Pakistan Banks’ Association Zafar Masud, said increasing
digital adoption is dismantling barriers to financial inclusion in
Pakistan, engaging people in the formal financial system, aiding in
the drive of economic growth, and posing an opportunity for Digital
Supply Chain Finance (or DSCF) to streamline and enhance financial
transactions within supply chains and offer substantial benefits to
SMEs.
He mentioned that the banking regulator mandated banks to develop and
implement DSCF solutions within six months to address the need to
increase SMEs’ access to finance and digitize payments. In this
regard, partnerships between banks, fintechs, and other technology
providers can expedite the rollout of digital SCF offerings, making
them accessible to SMEs relatively quickly. Finance Minister Muhammad
Aurangzeb also mandated the Pakistan Banks’ Association (PBA) to work
with SBP on enhancing financial inclusion in agriculture and SMEs,
particularly in the area of technology and leveraging existing digital
platforms, he added.
Zafar Masud pointed out that Pakistan stands at a unique crossroads
with substantial opportunities and challenges in enhancing digital
supply chain financing and SME growth. A multifaceted approach
combining regulatory support, technological adoption, cybersecurity
hygiene and awareness, and strategic partnerships is essential to
enhance digital supply chain finance and SME growth in Pakistan, he
further said.
Responding to audience queries, Saleem Ullah and Zafar Masud said that
start-ups will be facilitated through a private equity fund. Normally
banks do not have the requisite infrastructure and public money at
commercial banks have to be risk protected. However, banks should also
increase their risk appetite. Saleem Ullah also said that cash
flow-based lending instead of collateral based lending is also being
encouraged. He also stressed on consumer data protection by open and
digital banks. Zafar Masud said that a slow psychological shift is
coming in the banking sector to create ease of access to credit.
Aamir Aftab, Chief Product Officer at JazzCash, said, “Pakistan is
home to approximately 3 million small, and medium enterprises (SMEs),
and JazzCash aims to digitise its transactions. The platform processes
over 100,000 loans daily, providing a crucial financial tool for
MSMEs, which are the backbone of Pakistan’s economy but have
historically had limited access to formal financial sources,” said
Aamir Aftab. “With policy interventions that incentivize digital
payments, we can accelerate the adoption of digital financial
services. JazzCash’s extensive network allows it to digitise over PKR
100 billion each month, serving a customer base of 44 million.”
Organizer of the summit and CEO Terrabiz, Hamza Wasi Hashmi said the
digitization of the economy is a matter of paramount importance for
the government and the private sector in order to achieve maximum
financial inclusion and documentation of the economy. He further
stated that the digital supply chain finance solution is a
game-changer for Pakistan’s economy.
The summit featured a major panel discussion participated by President
NBP, Rehmat Hasnie; President HBL, Nassir Salim; Deputy CEO Meezan
Bank, Syed Amir Ali; CEO of HBL Microfinance Bank, Muhammad Amir Khan;
and Hamayun Sajjad, CEO Mashreq Bank, on Financing the Future: MSMEs,
Agriculture and Digital Transformation, and discussed issues like
expanding ease of access to financing, state collaboration, and
efforts to enhance innovation and efficiency.
Monis Rehman of Dukan, the summit partner, also conducted a workshop
on SME financing, co-facilitated by Dr. Imran Usmani, Vice Chairman
Shariah Board of Meezan Bank and Khurram Warraich, Group Head Digital
Lending from Telenor Microfinance Bank.
Other speakers included Atif Malik, COO of JS Bank who also heads the
PBA Task Force on SME Digital Financing Solutions.
