Karachi, October 14, 2024 – The State Bank of Pakistan (SBP) has introduced a new challenge fund aimed at improving access to finance for small and medium-sized enterprises (SMEs).
The Challenge Fund for Technology Adoption & Digitalization of SME Banking (CFS) is designed to help banks develop innovative technological solutions to better serve the needs of the SME sector.
In a statement released on Monday, the SBP explained that this fund, offered in the form of a grant, will support banks in creating advanced technological solutions to address the financing challenges faced by SMEs. The goal is to increase the availability of financial services and products tailored to the unique requirements of small businesses across the country.
The SBP explained key features of the Challenge Fund (CFS):
• Scope of the Fund:
The fund will focus on improving various aspects of SME banking, including:
— Developing loan origination and processing systems specifically for SMEs.
— Creating digital products such as digital scorecards, digital supply chain tools, and systems for the digital onboarding of SMEs for account opening.
— Enhancing or creating platforms that provide financial education, empowering SMEs to make informed banking and financial decisions.
— Upgrading digital banking platforms, including mobile apps, online banking, and customer portals.
— Supporting any other innovative ideas that address the challenges SMEs face in accessing financing.
• Eligibility:
Commercial banks, both conventional and Islamic, as well as other financial entities regulated by the SBP, are eligible to apply for the grant. Banks can also collaborate with Electronic Money Institutions (EMIs) or fintech companies, but the lead responsibility will lie with the applicant bank.
• Grant Size:
The grant amount will be based on the financial needs of the proposed project. However, banks receiving the grant must contribute 15% of the total project cost. Each bank will only be eligible to receive one grant, and the project must be completed within 8 months.
The SBP has invited banks to express their interest in applying for the grant through an Expression of Interest (EOI) form, which can be found in Annexure A of the official announcement. Proposals will be evaluated by the SBP based on internal criteria, with the goal of improving the banks’ ability to support SME financing.
This initiative is expected to play a significant role in promoting the growth of SMEs by increasing their access to tailored financial services and solutions.