To further facilitate SME financing by providing enabling regulatory environment, banks and development finance institutions (DFIs) are allowed to use credit information reports of private credit bureaus licensed by the State Bank of Pakistan (SBP).
In this regard, the banking regulator has made a few amendments in regulations under Prudential Regulations (PRs) for SME Financing.
While considering any credit proposal (including renewal, enhancement, and rescheduling/restructuring), banks and DFIs shall obtain an e-CIB Report on their prospective borrower(s) from Electronic Credit Information Bureau (e-CIB) of State Bank of Pakistan or any Credit Information Bureau licensed and regulated by SBP.
Banks and DFIs shall give due weightage to the credit report relating to the borrower(s) and concerned group. However, they can take exposure on defaulters, keeping in view their risk management policies and criteria, provided they properly record reasons and justifications in the approval form.
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While reporting to the Credit Information Bureau (e-CIB) of State Bank of Pakistan or any Credit Information Bureau licensed and regulated by SBP, such loans/advances may be shown as ‘rescheduled/restructured’ instead of ‘default.’
Banks and DFIs shall ensure that Rescheduling is not done simply to avoid classification. While reporting to the Credit Information Bureau (e-CIB) of State Bank of Pakistan or any Credit Information Bureau licensed and regulated by SBP, such loans/advances may be shown as ‘rescheduled/restructured’ instead of ‘default.’
Banks and DFIs are advised to ensure the circulation of these regulations among all their offices/branches for meticulous compliance in letter and spirit. Non-compliance with Prudential Regulations will lead to punitive action under the relevant provisions of BCO, 1962.
