Small and Medium Enterprises Development Authority (SMEDA) has launched an initiative to develop a separate Credit Risk Assessment System (CRAS) for easy disbursement of loans to the manufacturing SMEs in the country.
SMEDA Chief Executive Officer (CEO) Farhan Aziz Khawaja told the media here Monday that the initiative had been taken through a PSDP-funded project: “The Research, Regulatory Insight & Advocacy Assistance for SMEs” (RRI&A) under the federal Ministry of Industries & Production (MoIP).
The CEO said that SMEs in Pakistan face significant hurdles in obtaining finance. Challenges encompass limited data transparency, complex paperwork, cumbersome bank protocols, SMEs’ creditability and readiness, high interest rates, and insufficient collateral, he added and informed that the core aim of SMEDA initiative is to establish a reliable Credit Risk Assessment Model that can enable financial institutions in accurately appraising the creditworthiness of Manufacturing SMEs by pinpointing predictive cues and information channels to enhance current credit risk evaluation processes and tools.
He hoped that emerging model will help establish a comprehensive framework guiding well-judged lending choices made by financial institutions.
The initiative will provide a complete system for scrutinizing established credit risk assessment models, such as Credit Scoring and Credit Rating Models, to gauge the suitability of credits for Manufacturing SMEs.—APP
