The Banking Executive Magazine - October 2023

Bahrain Association of Banks Bahrain Association of Banks PROPOSES 10-POINT PLAN TO ENHANCE SME LENDING A 10-point plan aimed at improving small and medium enterprises’ (SMEs) access to sustainable and convenient financing options has been proposed by the Bahrain Asso- ciation of Banks (BAB). Presenting the proposal, Dr Waheed Al Qassim, the chief executive of the association, urged the Central Bank of Bahrain to continue supporting banks, thereby enhancing their ca- pacity to offer soft loans to SMEs. Speaking during a meeting with stakeholders from the government and private sectors, the official said Benefit, the operator of the national electronic fund transfer system and the national ATM and point-of-sale switch, should establish a credit rat- ing system for SMEs. Dr Al Qassim also called on insur- ance companies to collaborate with Tamkeen for introducing a portfolio ensuring compensation for affected parties, including banks, in case of defaults. He further said Article IV of the Labour Fund Law ‘Tamkeen’ No. 57 of 2006 should be revised to expand the fund’s financing scope from Is- lamic banks to include all Bahraini banks. CRITERION The association chief proposed that SMEs be redefined by removing the criterion of “number of employees” and instead focusing on factors such as annual revenues, business per- formance indicators, and other rele- vant metrics. Audit reports should be classified, starting with small-scale and one- person establishments, he said. The aim is to create simplified reports, enabling project leaders to grasp ac- counting methods and differentiate personal accounts from institutional ones. Dr Al Qassim suggested that spe- cialised units be established within banks, trained to assess and execute SME financing applications and that a dedicated academy ought to be created to train individuals managing SMEs. Finally, he proposed that stricter reg- ulations and laws be enacted to safe- guard the rights of banks and financial institutions supporting SMEs. The BAB believes that these propos- als will help to make SME financing more accessible and affordable, and will encourage banks to lend more money to SMEs. This will boost the growth of the SME sector, which is a vital part of the Bahraini economy. the BANKING EXECUTIVE 34 ISSUE 178 OCTOBER 2023