Evaluation of The SME Banking Sector of Pakistan

Abstract

The SME sector is important in terms of contribution to the economy and this is likely to be a characteristic of SMEs across the world. It acts as the backbone of every growing economy and therefore plays a pivotal role in terms of providing employment, poverty elevation as well as contributing to the GDP of the economy. Keeping in view the significance of this sector it is essential that the banking system of the country extends the required support for its growth. This paper has been undertaken to analyze and evaluate the overall performance of the SME Banking sector of Pakistan taking into account the credit advanced by specialized as well as commercial banks of the country. The SME specific financing products of the banks have been explored. At the same time, the constraints being faced by the SMEs in Pakistan has been highlighted as well as insecurities of the crediting Banks have been taken into consideration. These challenges become a hindrance in the way of access to SME finance. Therefore probable solutions to these have been proposed through this paper.