SME banking: SBP launches ‘Challenge Fund’

KARACHI: The State Bank of Pakistan (SBP) has announced to launch a “Challenge Fund” for technology adoption & digitalization of SME banking to support innovative solutions for SME banking in the country.

The SBP has been taking measures to facilitate banks in improving access to finance for SME sector and as a part of these efforts SBP is launching a ‘Challenge Fund’. This fund in form of grant will facilitate banks in developing innovative technological solutions to cater the banking needs of SME sector.

The scope of CFS will focus on loan origination and processing system for SMEs, developing digital products, creation or enhancing digital platforms that offer financial education, helping customers make informed decisions about their banking and financial management.

In addition, for upgradation or development of digital banking platforms, including mobile banking apps, online banking system and customer portals and any other unique idea relating to technological innovations that address the issues faced by SMEs to avail financing.

Commercial banks (conventional & Islamic) and other SBP regulated entities are eligible to apply for grant under CFS. Banks can also apply in partnership with EMIs and Fintechs. However, lead responsibility will rest with applicant bank.

Grant size will be determined according to the financing requirements of the proposal under consideration. However, each grantee will contribute 15 percent of the total cost, depending upon the quality & innovations of proposal, the grant size can vary, however one bank will get only one grant. The duration of the projects to be implemented through CFS grant should not exceed 08 months.

The SBP has invites interest of banks through Expression of interest (EOI) for availing grant under CFS to improve their SME financing portfolio. Banks proposals will be evaluated as per internal criteria by SBP.

Banks are encouraged to apply as per EOI on prescribed format placed at Annexure-B to SBP within two weeks.