Revised Prudential Regulations for Small and Medium Enterprise (SME) Financing

SBP has issued IH&SMEFD Circular No. 08 of 2013 in which they have issued revised PRs for Small & Medium Enterprises. Before this SBP issued separate Prudential Regulations (PRs) for SMEs in 2003 which has now further been revised with the following structure:

1. General Prudential Regulations that apply on both Small and Medium Enterprises
2. Specific Prudential Regulations for Small Enterprise Financing
3. Specific Prudential Regulations for Medium Enterprise Financing

Revised PRs are applicable with immediate effect for the fresh financing facilities. However, since the banks/DFIs need to segregate their existing SME portfolio according to the new definitions and revised classification criteria, Banks/DFIs are allowed a maximum implementation period upto September 30, 2013 for their existing portfolio. 

Revised Regulations (R-1) specifically require banks to prepare a comprehensive SME specific Credit Policy duly approved by BoDs. Risk Management Department is also requested to update existing policies, guidelines and procedures (including TAT as per SE R-10) to the effect and accordingly its approval from concerned quarters.

In these PRs they have provided different definition of Small Enterprises and for Medium Enterprises. This is because banks were probably much focusing on the medium level enterprises and small enterprises which are more in number and have much more need of bank credit, were being neglected. 

This seems a good step, as this shows that SBP is constantly working on their strategy of bringing credit for small businesses which play a very vital role in the development of economy. 

Why you took comprehensive test ?

Few Days back I got a call from Marketing Department of IBP in which they asked me that why you took comprehensive test for Charter Banker ? What was your motivation behind that? My answer was simple, "The tag of Chartered Banker".

Question comes in mind, why I need that ? Is that worth spending efforts, time and money? would it pay me back something ? Is that really necessary for my banking career? My Answer would be yes ! Although its new in Pakistan but this standard for banking qualification might earn repute in the coming days and it might be helpful for you in getting a good job or for showing off on your CV or Business card. But currently it seems that people don't care much about this certification. IBP has to develop and market it into a brand so people who are earning this charter should feel proud of it and get some reward from their organization.

However, another motivation behind this comprehensive test was that I would be able to review all the books once again before I go to AIBP exam in the coming winter. As this is very important to refresh your knowledge which fades away in your busy office routine.

The guide hinted that the response of comprehensive test would be pleasent ! So, hope for the best and get ready to show off your Charter of Certified Banker !

Good Luck !

Islamic Banks restrained by SBP to give special deposit rates

Islamic banks were providing special deposit rates to their customer
by foregoing their own share of profit. This practice was adopted by
the banks to compete in the highly challenging Enviornment of banking.
However, objecting this practice, SBP has barred the Scheduled Islamic
Banks to distribute profits with special premiums.
SBP has issued circular No.3 dated Nov 19, 2012 in this regard with
subject "Instructions for Profit & Loss Distribution and Pool
Management or Islamic Banking institutions "

Some Islamic Bankers are of the view that this step was done to curb
the high growth in deposits of Islamic Banks.


However, SBP has taken a stance that this step would bring more
transparency, disclosure & standardization to the Islamic Banking
System.

Comprehensive Exam - Experience

It was June, it was hot, loadshedding was on its peak and IBP is taking a comprehensive exam for Chartered Banker Certification !

Exam started at sharp 9. There were about 60 candidates which comprised of different age groups. Air Conditioning of SBP building was giving a true example that these are premises of Government ! A total failure it was ! Pedistal Fans and water at room temperature was the last hope to survive those six hours of exam !

"...... Ok ! Stop your boring stories and tell us how was the exam !!!!"

Exam was comprehensive ! First three hours it was objective portion which had 115 questions. Questions were covering almost all subjects of the syllabus and difficulty level was mixed! Over all paper was well designed and questions were good ! The only issue was hot weather !

After a two hours break it was a subjective portion containing about 15 questions ! This was mostly narrative with a few numerical questions of accounting ! Questions were checking both your theoretical and practical knowledge !

Most of the candidates were saying that they came without any preparation. But as it is said never underestimate your enemy, so this time, it is hard to pass if you have not covered the syllabus. 

Anyways good luck ! and try to take such exams in winter ! or IBP should conduct such exams with better arrangements.

Comprehensive Exam

Yesterday I received call from IBP office in which they asked me about
the preferred location for Comprehensive Test ! There are three test
centres at Lahore, Islamabad & Karachi. Most probably the test centres
would be in the premises of SBP. Comprehensive test would held on June
16, 2012.

When I further inquired they told that books for comprehensive would
the same for JAIBP. There is also an outline available on IBP website
which would help in getting idea about the questions in comprehensive
exam.

I also learned that those who are taking comprehensive exam can also
take AIBP exams which are in May 2012.

A friend was telling that IBP didn't get any significant response for
comprehensive exam that's why there are few test locations. Might be
banker didn't realized the actual worth of the charter banker
accreditation. Or might be the idea of comprehensive exam is not
conveyed properly.

Anyways ! Good luck to all the examinees ! I would be taking
comprehensive test in Lahore inshallah !

Lets prepare for IBP exams !

Things you should have before beginning !

Make sure you have got your self registered for the exams !

Get IBP books and reference books (as many as you can get)
To get the books, first checkout the syllabus here >>> http://www.ibp.org.pk/isqsyllabus1.aspx
Once you know which books you need, check the prices from here >>> http://www.ibp.org.pk/isq_books.aspx
For practice check out the past papers of IBP here >>> http://www.ibp.org.pk/previuos_exams.aspx

For a thorough study, first read the books and then solve the papers,
and for those who like selective study, first go through the past papers of IBP (Institue of Bankers Pakistan) and find their answers from the reference books.

If you have queries, you can discuss it on our facebook page http://www.facebook.com/ibp.ex with other IBP  (Institue of Bankers Pakistan) examinees.
There are various relevant books available in soft form on this blog. Get benefit from them.
You would also find solved papers and past papers of IBP on this blog.

Good Luck !

All these Giants ! Collared by IT guys !

All these big corporations are now heavily dependent on their IT
departments ! And offcourse their IT people have made them sure that
they are the best, but the management can only realize untill there is
a security breach by some hacker!

I am surprised that how vulnerable we are in the era of IT where there
are no checks by the regulators that how organizations are managing
their IT security and there are very few standards available in our
country!

We are now introducing branch-less banking through internet banking and mobile banking and all these avenues are no doubt very useful, but alongwith their huge business potential they bring in some risks which should be dealt pro-actively.

I hope SBP would have prepared some rules for that, but  we have to think about it before the hackers get them ! Whole organizations now depends upon these IT departments and especially in case of banks which are now going towards centralization through implementation of new Banking Softwares. This centralization increases the operational risk in case there is some security breach !

Just a point to ponder !