The State Bank of Pakistan has chosen Haball to act as the Supply Chain Finance (SCF) Multibank Technology Platform Service Provider.
After an independent and transparent bidding process, Haball has been chosen as a Multi-Bank Supply Chain Financing Platform as it has been digitizing supply chain collections for its clients and bringing efficiency to their business processes. State Bank had sought an expression of interest -EOI for the technology platform in October 2022.
“The key feature that made Haball stand out among the bidders was all the other solutions were not yet deployed in Pakistan”, stated Omer Bin Ahsan, CEO of Haball talking exclusively to ProPakistani.
He added that the fact that Haball has been successfully providing the first entirely-digital and Islamic supply-chain financing with over 90 percent recovery rate contributed to this achievement. He also said that this ‘productive lending’ will enable small businesses to grow in these challenging times of skyrocketing inflation and interest rates through unique Shariah-compliant access to capital.
Pakistan has 5.2 million SMEs; however, only 0.25% of the business community in Pakistan has access to digital banking services, while the majority relies on traditional brick-and-mortar operations.
Traditionally, it takes 2–3 days between a distributor raising a financing request and its fulfillment after the creditor does its due diligence by even sending personnel physically to the warehouse to verify the stocks. Haball claims to reduce this time to 15 seconds with real-time inventory data, digital offer and acceptance, visibility of utilization of funds and a digital confirmation of the sale of the goods.
“Haball’s flagship product, Wisaaq, has been remarkably successful and within 5 months of its commercial launch, Haball had processed $21 million and facilitated digital collections of $12 million in repayments” stated a press release by Haball.
It has been empowering manufacturers and SMEs to reduce reliance on cash-based transactions and streamline the reconciliation and financing process, which is completely Shariah compliant.
The digitization of the supply chains is a $5 billion opportunity in the country, and roughly 1.5% of that value moves through financial services in a manual, broken process. This estimate highlights the potential of the opportunity this platform can address by digitizing the supply chain financing process.
“In addition to the Supply Chain Financing for a Bank, it will actually offer substantial cross-selling opportunities to the bank because the banks would now have substantial data about the distributor,” emphasized Dr. Inayat Hussain, the Deputy Governor of State Bank at the Cashless Supply Chain Event 2022.
Risk Management and Future Plans:
When asked about the risk-management protocols, Omer said that all banking side processes of the solution from credit assessment, onboarding, disbursement and recovery, everything is compliant with the same security measures as the commercial banks.
“Since our business model is not capital intensive and operates on profitable unit economics. Raising money is only for strategic investments and scaling operations”, added Omer Bin Ahsan.
He added that Haball has been experiencing an increased demand every year, especially with the new mandate given by the State Bank of Pakistan for which they may have to connect 10–12 banks in the next two years.
Haball is providing businesses with greater access to working capital, de-risks corporate balance sheets from receivables, and provides the banks with secure agnostic digital payments with same-day settlements and cross-selling opportunities. This paves the way for sustainable economic growth nationwide and Islamic financial inclusion.
This selection aligns with the State Bank’s ongoing efforts to promote Islamic financing, especially after the recent verdict by the Federal Shariat Court on the adoption of Islamic Banking, and the prioritization by the Federal Government and State Bank of Pakistan to have a structured implementation plan for Riba-Free banking.
By employing Islamic principles of transparency, fairness, and risk-sharing, augmented by digital supply chain entrenchment, SMEs and corporate supply chains can scale their business operations through the liquidity provided by the banks.
