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Group 3:Risk Management & MIS

Group 3:Risk Management & MIS. Chair: Mr. Safar Ali Lakhani President Soneri Bank Limited. Recommendation 1. Set up SME as dedicated BU within Bank: Industry sector know-how Subsegmentation & coverage model Know-your-customer (relationship based model)

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Group 3:Risk Management & MIS

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  1. Group 3:Risk Management & MIS Chair: Mr. Safar Ali Lakhani President Soneri Bank Limited

  2. Recommendation 1 • Set up SME as dedicated BU within Bank: • Industry sector know-how • Subsegmentation & coverage model • Know-your-customer (relationship based model) • Mindset shift in Risk Management (portfolio based management with predefined triggers)

  3. Recommendation 2 Start with limited exposures • Set up limit for starters at maximum consumer finance (e.g. PKR 500K) • Encourage job creation

  4. Recommendation 3 Keep it simple and short: • New customers have limited data • Customer self assessment to be used (sales figure) • Develop matrix of Years in Business and Years with Bank and provide financing as % of sales

  5. Recommendation 4 Verification of loan utilisation: • direct payment from Bank to Vendor for larger amounts, if possible

  6. Recommendation 5 • Invest in IT to track and monitor large number of accounts and its performance

  7. Recommendation 6 • Risk Mitigation • Expand eligible collateral • Cash-flow analysis • Credit insurance • Personal and/or 3rd party guarantees • Risk based pricing

  8. Recommendation 7 • Develop MIS (centralised): • Actuals • Trends • Stress Testing • Risk Triggers (predefined) • Collections incl. Time buckets and action plans

  9. Recommendation 8 Strengthening of Credit Bureaus: • Positive data • Credit history • Expanding role of private Credit Bureau (incl. Rating agencies)

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