Why lend to small and medium enterprises? – Ishrat Husain, Governor, SBP
Why should commercial banks lend to small- and medium-sized enterprises (SMEs)? They haven’t done this before. What has happened that they should do it now? Aren’t there higher risks of default and non-payment from these types of borrowers?
These are legitimate questions and I would like to focus on five different aspects of this issue:
The overall context and direction of commercial bank lending;
Win-win situation for the banks, entrepreneurs and national economy;
Credit appraisal technology for SMEs;
Regulatory and infrastructure support and
Learning from international best practices.
The Overall Context and Direction of Commercial Bank Lending
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