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    Cir 01 Annexure II

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    abidkilyani
    The document is a questionnaire for banks and financial institutions to self-assess their compliance with regulatory requirements for small and medium enterprise financing in Pakistan. It contains 25 questions addressing issues like assessing borrowers' repayment capacity and cash flows, obtaining proper collateral and guarantees, adhering to exposure limits, monitoring loan utilization, classification and provisioning of loans. The questionnaire must be filled out and signed by the Chairman of the Board of Directors.

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    Cir 01 Annexure II

    Uploaded by

    abidkilyani
    102 views3 pages
    The document is a questionnaire for banks and financial institutions to self-assess their compliance with regulatory requirements for small and medium enterprise financing in Pakistan. It contains 25 questions addressing issues like assessing borrowers' repayment capacity and cash flows, obtaining proper collateral and guarantees, adhering to exposure limits, monitoring loan utilization, classification and provisioning of loans. The questionnaire must be filled out and signed by the Chairman of the Board of Directors.

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    issue by SBP

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    The document is a questionnaire for banks and financial institutions to self-assess their compliance with regulatory requirements for small and medium enterprise financing in Pakistan. It contains 25 questions addressing issues like assessing borrowers' repayment capacity and cash flows, obtaining proper collateral and guarantees, adhering to exposure limits, monitoring loan utilization, classification and provisioning of loans. The questionnaire must be filled out and signed by the Chairman of the Board of Directors.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    102 views3 pages

    Cir 01 Annexure II

    Uploaded by

    abidkilyani
    The document is a questionnaire for banks and financial institutions to self-assess their compliance with regulatory requirements for small and medium enterprise financing in Pakistan. It contains 25 questions addressing issues like assessing borrowers' repayment capacity and cash flows, obtaining proper collateral and guarantees, adhering to exposure limits, monitoring loan utilization, classification and provisioning of loans. The questionnaire must be filled out and signed by the Chairman of the Board of Directors.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    IRAF: QUESTIONNAIRE FOR SELF-ASSESSMENT

    Annexure 2
    QUESTIONNAIRE ON PRUDENTIAL REGULATIONS FOR SMALL & MEDIUM ENTERPRISES FINANCING

    Compliant
    S# Particulars Comments
    Yes No

    SOURCE AND CAPACITY OF REPAYMENT AND CASH FLOW BACKED LENDING


    1. Did the Bank/DFI devise a system to identify the sources of
    repayment and assess the repayment capacity of the borrowers
    using the assets conversion cycle and cash flow analysis?

    2. Did the Bank/DFI devise a mechanism to assess the prevalent


    conditions and future prospects of the sector or industry it is
    lending to?

    3. Did the Bank/DFI identify the key drivers, risks and risk mitigants
    of the Borrower’s Business?
    PERSONAL GUARANTEES
    4. Did the Bank/DFI obtain personal guarantee of the owners
    (directors other than nominee directors for limited companies) of
    the SME before extending any facility?

    LIMIT ON CLEAN FACILITIES


    5. Did the Bank/DFI limit its clean exposure on an SME to a
    maximum of Rs. 3 million with funded facilities not exceeding Rs.
    2 million?

    6. Did the Bank / DFI before taking clean exposure obtain a


    declaration from the SME stating its abstinence from
    availing/having availed clean facilities from any other bank/DFI?

    SECURITIES
    7. Did the Bank/DFI secure appropriately all facilities extended to
    SMEs over and above the limit for clean facilities?
    MARGIN REQUIREMENTS
    8. Did the Bank/DFI adhere to the margin requirements as prescribed
    by State Bank of Pakistan?

    PER PARTY EXPOSURE LIMIT


    9. Did the Bank/DFI limit its exposure on a single SME to a
    maximum of Rs 75 million?
    10. Did the Bank/DFI ensure that the aggregate exposure availed by a
    single SME from all the financial institutions remains limited to Rs
    150 million (including leased assets) or otherwise to Rs 100
    million?

    AGGREGATE EXPOSURE OF A BANK/DFI ON SME SECTOR


    11. Did the Bank/DFI adhere to the limits prescribed by the SBP for
    aggregate exposure of a Bank/DFI on SME sector?

    1
    IRAF: QUESTIONNAIRE FOR SELF-ASSESSMENT
    Annexure 2
    MINIMUM CONDITIONS FOR TAKING EXPOSURE
    12. Did the Bank/DFI obtain the credit report relating to the borrower
    and his group from the Credit Information Bureau (CIB) of SBP
    and give it due weight-age before extending an exposure to an
    SME above Rs.500, 000/-?
    13. Did the Bank/DFI obtain from the SME Associations information
    regarding the character and credit worthiness of the prospective
    SME borrower?

    14. Did the Bank/DFI obtain a copy of financial statements duly


    audited by a practicing Chartered Accountant of every SME
    which:
    a) Is a limited company
    b) Acquirers an exposure in excess of Rs 10 million
    c) Holds an exposure that is not fully secured by liquid assets

    15. Did the Bank/DFI obtain the ‘Borrower’s Basic Fact Sheet’ in the
    approved format of the State Bank of Pakistan from the SME
    before providing any facility?

    PROPER UTILIZATION OF LOAN


    16. Did the Bank/DFI develop and implement an appropriate system
    for monitoring the utilization of loans?
    RESTRICTION ON FACILITIES TO RELATED PARTIES
    17. Did the Bank/DFI abstain from taking an exposure wherein any of
    the following, individually or collectively, carries an interest:
    a) Directors of the Bank/DFI
    b) Shareholders holding 5% or more of the share capital of the
    Bank/DFI
    c) Chief Executive of the Bank /DFI
    d) An employee of the Bank/DFI
    e) Any family member of the persons mentioned above?

    CLASSIFICATION AND PROVISIONING FOR ASSETS

    LOANS / ADVANCES
    18. Did the Bank/DFI adhere to the guidelines prescribed by SBP for
    provisioning and classification of its SME asset portfolio?

    19. Did the Bank/DFI make subjective evaluation of its performing


    and non-performing SME credit portfolio besides applying the
    time-based criteria for classification?

    20. Did the Bank/DFI abstain from changing the status of


    classification of a loan/advance through rescheduling/restructuring
    unless the terms and conditions of rescheduling/restructuring are
    fully met for a period of at least one year (excluding grace period,
    if any) from the date of the rescheduling/restructuring and at least
    10% of the outstanding amount is recovered in cash?

    2
    IRAF: QUESTIONNAIRE FOR SELF-ASSESSMENT
    Annexure 2
    21. Did the Bank/DFI abstain from taking to income account the
    unrealized mark-up on loans (declassified after rescheduling/
    restructuring) unless at least 50% of the amount is realized in cash?

    22. Did the Bank/DFI abstain from revaluing the Forced Sale Value of
    collateral before passage of three years for the previous valuation?

    SUBMISSION OF RETURNS

    23. Did the Bank/DFI submit to Banking Inspection Department the


    borrower-wise annual statements regarding classified loans and
    advances?

    TIMING OF CREATING PROVISIONS

    24. Did the Bank/DFI, at least on a quarterly basis, review the


    collectibility of its SME advances portfolio, properly document the
    evaluations made and provide for immediately in books of
    accounts any shortfall in provisioning?

    VERIFICATION BY THE AUDITORS

    25. Did the external auditors verify during their annual audits of
    bank/DFI that all requirements as per SBP guidelines for
    classification and provisioning for assets have been complied with?

    _______________
    Chairman
    Board of Directors

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