SBP Launches Challenge Fund for SMEs

The State Bank of Pakistan (SBP) has launched the Challenge Fund for SMEs (CFS) to support innovative solutions for SME banking in the country. The step has been taken as part of SBP’s effort to facilitate banks in improving access to finance for SME sector.

The Challenge Fund for SMEs will be in a form of a grant that will facilitate banks in developing innovative technological solutions to cater the banking needs of SME sector. Furthermore, this will also enable to increase the access and usage of digital financial services by SME sector.

Features of Challenge Fund for SMEs

Following are the key features of CFS:

Scope of CFS

The scope of CFS will focus, however, it will not be limited to the following areas:

Developing SME banking solutions
Developing digital payment solutions for SMEs
Developing E-Commerce / market place
Digitizing loans application and credit management

Eligibility

Commercial Banks (conventional & Islamic) are eligible to apply for grant under CFS. Banks can also apply in partnership with Non-banking financial Institutions (NBFIs), FinTech’s, Electronic Money Institutions (EMI) and software houses. However, lead responsibility will rest with the applicant bank.

Grant Size

Grant size will be determined according to the financing requirements of the proposal under consideration. However, each grantee will contribute 15% of the total cost. Depending upon the quality & innovations of proposal, the grant size can vary, however one bank will get only one grant. The duration of the projects to be implemented through CFS grant should not exceed 8 months.

SBP invites interest of banks through Expression of interest (EOI) placed at Annexure A for availing grant under CFS to improve their SME financing portfolio. Banks proposals will be evaluated as per technical criteria developed by SBP.

Banks are encouraged to apply as per EOI on prescribed format placed at Annexure-B to SBP latest by April 18, 2022.