Islamabad, Oct 13: SBP Introduces Challenge Fund to Boost Support for SMEs in Pakistan. In order to assist banks and financial technology providers (Fintechs) with a digital solution to develop new or modify existing financial products & services and delivery platforms that will enhance access to financing for the SME sector, the State Bank of Pakistan (SBP) has established the Challenge Fund for SMEs (CFS).
Commercial banks that submit their proposals for goods and services to support SMEs in Pakistan will be awarded grants by the banking regulator. The challenge fund aims to leverage technology (including FinTech) to drive solutions for SME banking.
Digital SME banking encompasses a wide array of financial services that can be accessible and provided at a reasonable cost via digital platforms. Offering accessible finance choices can assist promote entrepreneurship? According to estimates, Pakistan’s market for digital finance services (DFS) could reach US$ 36 billion by 2025, boosting the country’s GDP by 7%, adding 4 million new employment, and generating US$263 billion in new deposits.
Only a strong and effective DFS ecosystem can realize this promise. Pakistan now has a developing DFS ecosystem that requires business and government support.
The CFS seeks to give banks and financial technology companies (Fintechs) with a digital solution to help them create new financial products and services, modify current ones, and create delivery platforms that will improve the SME sector’s access to financing.
The goal of the challenge fund is to promote entrepreneurship by offering accessible funding options. The following areas will be the primary emphasis of CFS, though not exclusively:
1.System for the Origination and Processing of Loans to SMEs.
2.Creating digital products (such as digital supply chain products, digital scorecards, and digital SMEs’ account opening onboarding).
3.Development or improvement of digital platforms that provide financial education and assist users in making wise choices regarding their banking and money management.
4.Development or improvement of digital banking platforms, such as customer portals, online banking platforms, and mobile banking apps.
5. Anything else that comes to mind when it comes to technology breakthroughs that solve the problems SMEs have getting finance.
The aforementioned areas will concentrate on improving finance for the small and medium-sized enterprise (SME) sector, with a particular emphasis on underserved areas, women-led SMEs, and startups.
Applying for CFS is open to conventional and Islamic commercial banks as well as other SBP-regulated organizations. Banks who work with Fintechs or EMIs can also apply. However, the applying bank will be in charge in the primary role. The grant amount will be decided based on the finance needs of the project that is being evaluated. But each recipient will foot the bill with 15% of the total.
The funding amount varies from project to project based on the quality and inventiveness of the proposal. But just one bank will receive a grant. SBP states that the projects should ideally not last longer than eight months.
