Introduction to SME, Micro finance

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Introduction to SME, Micro finance
KhushhaliBank Limited
By Syed Imran Ali Shah Area Manager
Khushhalibank ltd
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What is SME Definition? Small Medium
Enterprises are defined as follows, as approved
in SME Policy 2007
SME Definition SME Definition SME Definition SME Definition
Enterprise Category Employment Size (a) Paid Up Capital (b) Annual Sales (c)
Small Medium Enterprise (SME) Up to 250 Up to Rs. 25 Million Up to Rs. 250 Million
Loan limit 0.5M - 75M (Collateralized) The
Federal Government, in line with the economic
development of Pakistan may, from time to time
modify the eligibility criteria as it sees fit.
All providers of services receiving funding from
the Government may define more narrow scopes for
specific targeting purposes.
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What is Microfinance?

• Microfinance
• Banking for low income individuals or groups who
  would otherwise have no other means of gaining
  financial services
• The goal of microfinance is to provide a means
  of,
• Saving money
• Borrowing money
• Insurance
• Remittances
• Microsavings
• A branch of microfinance, consisting of a small
  deposit account offered to lower income families
  or individuals as an incentive to store funds for
  future use.
• The minimum balance requirements are often
  waived, or very low, allowing users to save small
  amounts of money.

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Microfinance

• Microcredit
• A small loan given to poor people to help them
  become self employed. 
• Also known as "microlending" or "microloan". 
• Microinsurance
• A division of microfinance, microinsurance looks
  to aid poor families by offering insurance plans
  tailored to their needs.

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Impact of Microfinance
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Microfinance Industry Overview

• Microfinance Institution (MFI)
• A non-bank, non-government organization (NGO)
• Registered under a variety of regulations
  including the Societies Act, the Trust Act, and
  the Companies Ordinance.
• BRAC-Pakistan and ASA-Pakistan.
• Microfinance Bank (MFB)
• A commercial bank licensed and prudentially
  regulated by the Central Bank of Pakistan.
• Licensed under the Microfinance Institutions
  Ordinance, 2001.
• Legally empowered to accept and intermediate
  deposits from the public.
• Rural Support Programme (RSP)
• Also an NGO registered as a non-profit section 42
  company under the Companies Ordinance.
• Purely rural focus of its credit operations.
• Registered with and supervised by the Securities
  and Exchange Commission of Pakistan (SECP).

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Customer segments

• Research indicates that Microfinance Programmes
  work best when targeted at populations just below
  and above the poverty line
• Transitory Non-Poor and Vulnerable
• Those people who live above the poverty line
• Transitory Poor
• Those people who live below the poverty line for
  most of the time, but not always
• Extremely and Chronic Poor
• Those people who always live below the poverty
  line, all the time

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• MICROFINANCE BANKS IN PAKISTAN
• Microfinance Bank licensed and prudentially
  regulated by the State Bank of Pakistan to
  exclusively service microfinance market
• Advans Pakistan Microfinance Bank
• Apna Microfinance Bank Ltd. (formerly NMFB)
• Kashf Microfinance Bank (KMFB)
• KhushhaliBank Limited
• National Rural Support Programme Bank Ltd. (NRSP
  Bank)
• Pak-Oman Microfinance Bank Ltd. (POMFB)
• Rozgar Microfinance Bank Ltd. (RMFB)
• Tameer Microfinance Bank Ltd. (TMFB)
• The First MicroFinanceBank Ltd. (FMFB)
• Waseela Microfinance Bank

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Rising Capital for Small, Medium Micro
Entrepreneurs
Why too many Entrepreneurs dont know how to
raise Capita? Regardless of sector or size,
companies wanting to expand sales, production and
profits must have funds to hire people, buy
equipment and acquire larger facilities. And much
of that capital will come from credit financing.

• Tools Resources
• Register as limited company
• Design your company logo
• Find cash flow solutions
• Get business card designed printed
• Find an account
• Find office premises
• Raise finance from Institute

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Rising Capital for Small, Medium Micro
Entrepreneurs
Microfinance  Micro-enterprises and small
businesses account for the major share of the
private sector and employment in many developing
countries. Yet, despite their size and
importance, these businesses rarely have access
to the savings, credit, and payment services
provided by formal financial institutions.
However MFBs in Pakistan are the specialized
institutes who are facilitating to micro
enterprises up to a maximum of Rs. 500,000/- with
easy procedure. The MFB shall extend the
enterprise loans only in the name of micro
entrepreneur to ensure traceability and reduce
the incidence of multiple borrowing.
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Khushhalibank Limited

• Pakistans first Microfinance Bank
• Established in August 2000 as part of government
  of Islamic Republic of Pakistans poverty
  reduction strategy and its Micro Finance Sector
  Development Program (MSDP
• Pakistans largest Micro Finance Bank in terms of
  outreach
• Footprint of 110 branches

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KBL Role

• Retailing microfinance services nationwide.
• Pivotal to building a conducive environment to
  attract other MFIs.
• Provide NGOs a platform to evolve/strengthen
  their respective specialist functions.

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KBL NetworkPunjab 68Sindh
24Balochistan 3NWFP
12AJK 03
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KBL Update as of 30th June-2013
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Products Services

• Liability Suite
• Current Accounts
• Savings Account
• Term Deposits
• Asset Suite
• Individual Loan ( Secured)
• Group Loan ( Unsecured)
• Value Chain Financing
• Other Services
• Western Union Money Transfer
• Repayments at Omni Dukaans

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Lending Suite

• Khushhali Cash Sahulat
• (Asset backed lending for Individuals)
• Khushhali Qarza
• (Unsecured Group Lending)

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Khushhali Qarza

• Description
• Offered to borrower groups including 5 to 20
  people for enterprise, livestock or agriculture
  purposes
• Social collateral ( Grameen Model)
• Target Segment
• Geared towards fulfilling small financing
  requirements for our rural and urban customers.
• Loan Ticket
• Rs 10,000(Min)- Rs 50,000(Max)
• APR
• 31 (Charged on outstanding balance)
• Types of Loan
• Agri
• Livestock
• Enterprise
• Repayment Options
• EMI (Equal Monthly Installments)
• Bullet
• Tenure
• 3-12 months

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Khushhali Cash Sahulat

• Description
• Collateralized loan to individual customers
• Collateral includes Gold, National Savings
  Certificates (NSC's) and Khushhalibank TDs
• Target Market
• Urban and Rrural
• Slightly larger businesses
• Loan Ticket
• Rs 25,000(Min) - Rs 150,000(Max)
• APR
• 28 against Gold
• 25 Land Backed/passbook
• 15 against liquid securities
• Types of Loan
• Agri
• Livestock
• Enterprise
• Repayment Options
• EMI(Equal Monthly Installments)
• Bullet

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Liability Suit
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Current Account

• Current Deposit Account
• CDA is an excellent transactional account for
  Individuals with frequent transaction needs
  small business owners
• Minimum balance requirement is Rs. 500 and
  account can be opened with Rs. 100
• Basic Banking Account
• BBA is also targeted towards the mass market with
  frequent transaction needs
• Minimum balance requirement is ZERO and account
  can be opened with Rs. 1000

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Savings Account

• Mehfooz Account
• Targeted towards small savers, households, KBL
  borrowers
• No minimum monthly balance or monthly average
  balance requirement
• Interest Rate, 6 per annum
• Karobari Munafa Account
• Targeted towards small business owners
• Minimum balance requirement is Rs. 5,000 and
  account can be opened with Rs. 500
• Interest Rate, 6 per annum
• Behtreen Bachat Account
• Targeted towards elderly savers, investors and
  pensioners
• Minimum balance requirement is Rs. 25,000 and
  account can be opened with Rs. 5,000
• Interest Rate, 6-8 per annum depending upon
  amount of deposit

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Saving Accounts Strengths
Brand Name Strengths
Mehfooz Account No Minimum balance requirement FREE first 10 leaf Check book Interest accrual on daily balance and not minimum balance
Karobari Munafa Unlimited Free POs/DDs Low MAB requirement
Behtreen Bachat Account High GIR FREE Life insurance
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Term Deposit

• Khushhali Aamdani Certificate (KAC)
• Pays out profit at the end of the specified
  tenure i.e at maturity.
• Designed for customers with strong savings who
  are looking for higher rate of return
• Min Deposit Requirement is Rs. 5,000/-
• Tenures of 1,3,6,12,18,24 and 36 months
• Issuable in multiples of Rs. 1,000
• and Khushhali Izafa Certificate (KIC)
• Pays out interest on a monthly basis
• Designed for customers with strong savings who
  are looking for higher rate of return
• Min Deposit requirement is Rs. 25,000/-
• Tenures of 6,12,18,24 and 36 months
• Issuable in multiples of Rs. 1,000

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KBL TDCs Strengths
KBL Strengths
TDCs Competitive interest rates Profit pay-out option Low fixed penalties on early encashment.
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Other Services

• Western Union Money Transfer facility is provided
  in all 107 branches.
• Approx. 1,000 txns per month
• Benefits
• NFI
• Cross-sell opportunity
• Brand Equity enhancement
• Loan repayment through OMNI Dukaans mapped on all
  KBL branches
• Over 500 Agents on board accepting repayments
• Benefits
• Transactional convenience
• Increased outreach

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Employment career for post graduates in
Khushhalibank ltd.
Eligibility criteria for recruitment Education
Min Graduate (BA, B.Com, BBA, BPA or equalant)
Age 28years max Gender Equal
opportunity for both Exp Experience in
Relevant fieldll be preferable/Fresh graduate
are encouraged to apply
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Employment career for post graduates in
Khushhalibank ltd.
Field Career Considering nature of business we
offer field office based jobs in initially
three caders Entry Level BDO (Business
Development Officer) for field based permanent
officer job Job Description Sale
Recovery of loan products (Credit Portfolio)
Entry Level Operations Officer for
back-office function permanent
officer job Job Description Responsible to
execute back-office functions smoothly i.e Cash
dealing, Client Servicing,
Transfers, Clearing, A/C Opening etc. Entry
Level Sales Consultant, field based job
for deposit mobilization Job
Description Responsible to mobilize deposit from
market.
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Fareeda Sukkar By S. Imran Ali Shah
   
Thinking about change helps us believing in
ourselves, and enables us to make plans bigger
than our existing circumstances. But when it
comes to the womenfolk in Pakistan, all their
plans become more difficult to realize as
compared to the male members of the society,
unfortunately. In the most of the underdeveloped
areas, women have to struggle more for everything
starting from developing an identity of their own
to getting themselves established
financially.The story of Ms. Fareeda, resident
of Sukkar, is no exception. Her father was the
only bread earner of her family. He was in
trouble making ends meet. That lack of resources
prevented her and her siblings from joining
school or any vocational institution thus
perpetuating the vicious cycle of deprivation and
lack of means to improve their life.However,
one thing distinguished Ms. Fareeda from the
average women. She had a strong resolve to
support her family and to give them a chance for
building a brighter future free of any financial
worries. This led her to a decision of starting
her own embroidery business.With no formal
education, Ms. Fareedas decision was a difficult
task to accomplish. On her way to success, she
faced implications like social and domestic
backlash and contending with lack of resources.
Putting aside all her inhibitions, she contacted
Khushhalibank, the pioneer bank in microfinance,
for financial assistance. Khushhalibank responded
Ms. Fareedas request with not only the initial
finances to enable her for starting embroidery
business but also gave her the best possible
financial and business advisory to run her
business smoothly.Now with the support of
Khushhalibank, Ms. Fareeda is running her
embroidery business successfully with plans for
expansion on a commercial scale, thus gaining
access to urban and rural markets. Ms. Freeda has
become a successful entrepreneur who is a role
model for other members of the society at the
same time. She is also teaching the art of
embroidery to women of the area for helping them
changing the course of life for their families.
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IBA Scholarship Program
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Q A
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Thank You