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Credit Bureau & SME’s Lending in Palestine Ali Faroun. The World Bank Strengthening Accountancy as a Foundation for MSME Sector Development and Job Creation Dead Sea Resort Area of Amman, Jordan June 18-20, 2013. Palestinian Banking System. Total number of MFI’s (13)

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Credit Bureau & SME’s Lending in Palestine Ali Faroun


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credit bureau sme s lending in palestine ali faroun

Credit Bureau & SME’s Lending in PalestineAli Faroun

The World Bank

Strengthening Accountancy as a Foundation for MSME Sector Development and Job Creation Dead Sea Resort Area of Amman, Jordan June 18-20, 2013

slide2

Palestinian Banking System

Total number of MFI’s (13)

Total number of MFI’s branches (75)

pma credit bureau systems
PMA Credit Bureau Systems
  • Develop Credit Registry system
  • Develop Credit Scoring system
  • Develop Bounced Checks system
  • Develop Mortgage & Housing system
  • SME’s Database (under development)
development challenges
Development Challenges

Willingness and Support

Coordination

Human Resources

IT Systems

Demographic and financial data Reporting

Reporting Threshhold.

Consent Clause

Kick – off Date

slide5

Success Elements

  • Data Accuracy
  • Data Completeness
  • Data Updating
systems features
Systems Features

Online real time 24/7

Hybrid business module

Response time within millisecond

Zero reporting threshhold

Updated demographic & financial data daily basis

Two methodologies of credit rating (Manner of payment, score card)

Assign Credit Score for each Borrower and Guarantor, PD within 12 months, Risk grades & Reason code

Customer classification on Bounced checks system

Credit Registry & Credit Scoring systems

slide7
Cont….

Results:

Adoption of modern and appropriate CR combined with quality

of credit information can allow lending institutions to:

Manage and mitigate credit risks

Increase lending volume

Accelerate access to finance

Generate profits

Improve the economic situation

Lower cost of credit for good payers

Reduction in credit shopping multiple lending, over-indebtedness

Improvement in borrower's responsibility and behavior

encourage sme lending
Encourage SME lending

Conduct conference in Feb, 2013 aim to Empower SMEs in Palestine

Initiate appropriate definition for SME’s

Establish Committees to enhance SME’s

Technical committee led by PMA

National committee led by Ministry of National Economy

Encourage SME lending by providing banks with incentives to increase their SMEs credit portfolio

(Waive the 10% of down payment for rescheduled loans, waive the 2% of general risk reserve requirements on the total SME credit portfolio)

Running Projects:

SME’s Database

slide9

Achieved Results

Banks Credit Portfolio

Banks Credit portfolio up by 129%

slide10

Cont….

  • MFI’s Credit Portfolio

MFI’s Credit portfolio up by 86%

(Average loan size is 3000$)

37

slide11

Cont….

  • SME’s Credit Portfolio

Number of SME’s up by 34%

SME’s VS Large enterprises

slide12

Cont….

SME’s Portfolio up by 57%

Total Portfolio According to the size of Enterprises

slide13

(up by 70%)

(57%up by )

the impact of credit bureaus in job creation
The Impact of Credit Bureaus in Job Creation

Module

Conducted by IFC in collaboration with PMA

Study inputs & Assumptions

Loan size up to 1$m per borrower

Loans used in in industrial, services and trade sectors

CAPEX Loans

Average weight of credit reporting

Gross Fixed Investment per Labor unit

Expected Additional Direct Jobs to be Created in 2013

about 6,359

Create about 12% of total jobs required from the government

thank you
Thank You

For further information, please contact:

Palestine Monetary Authority

Nablus Street, AL-Bireh

Ramallah, Palestine

Tel. +972 2 2415253

Fax.+972 2 2407074

Email: afaroun@pma.ps

Website: www.pma.ps