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7/23/2019 SME Capacity Building Initiative
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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
1 | P a g e
CAPACITY BUILDING
INITIATIVE-SME
LENDING
May14,2008
PROPOSAL - Exposure
Draft
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In line with ABL’s strategic focus to optimize its SME asset portfolio, this is a modest effort to highlight the
underlying challenges of “Skill Deficit”, which our bank is facing to achieve the target levels of SME portfolio.
By conducting a root cause analysis, one could safely conclude that “Capacity Building at the grass root level,
i.e. our field staff”, is the dire need of the time.
During my past 3 years experience of managing commercial and SME accounts of the CRBG portfolio at ABL, I
have developed a comprehensive understanding of all the aspects of SME credits at ABL. I got an aggressive
exposure as a Relationship Manager, registering approx. 100% YoY growth in my existing fund based portfolio
and the honor of getting more than Rs. 1000 Mn approved in one year.
The challenges and potential obstructions faced with the growth of SME assets in ABL, motivated me to
compile a comprehensive and purpose-built Capacity Building Plan (CBP) to be rolled out across Pakistan
which includes:
· Simulation of the overall credit disbursement and management cycle.
· Understanding all the 6 phases and 8 stakeholders of credits in ABL.
· Understanding the credit risk architecture of ABL.
· Recent international developments in the perspective of Credit Risk.
· Credit risk in the context of BASELII Accord.
The above mentioned areas of CBP would be covered through the following modes:
· Contextual Lectures covering
· Case base learning.
· Role based learning.
The business outcome of the overall project is to:
“Enable our field staff, i.e. 1500 field Staff [750 Branch Managers + approx 750 Credit Officers] to Initiate,
Disburse, Manage and Monitor SME credits.”
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1.1 Problem Statement
The following table describes the challenges faced by ABL, towards the optimization of SME credits asset books.
Challenge Action Opportunity
The new credit architecture and
risk framework was introduced in
2005, but to date no
comprehensive capacity building/
training program has been
conducted by the bank, to match
the skill and knowledge
requirements.
· Facilitation through
training to grab the
modern credit
framework.
· Staff Renewal needed.
-Decreased
Supervision.
-Improved credit management.
-TAT reduced.
Our BMs, and experienced field
staff, though very learned and
seasoned bankers, are unaware of
the modern credit
culture/philosophy of the bank.
They are not aware of the
Protocol/Semantics/Syntax of the
modern centralized credit
framework that has been laid down
by RMG.
-----------------Do-------------
-----
------------------Do--------------------
Around 9 formats [CA, CM, Spreads,
Projections, Stress testing, ESRA,
APR, PR checklist] have beenintroduced by RMG for credit
reviews and initiations, which are
too sophisticated for our field staff,
specially mid-age and senior branch
manager to learn. Lack of training
actually developed an alienation,
perhaps a reluctance to initiate
credit in our field staff.
· Comprehensive hands-
on simulation based
learning to enable themto initiate credit reviews
and fresh credit
proposals using all these
formats in greater details.
· Training to include the
implications and
significance of these
formats.
-High turnover of credit proposal.
-High efficiency of human resource.
-Branches enabled to raise creditproposal independently
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It is important to quote the fact
that “On average, proposals are
atleast returned twice by the RMG,
just due inappropriate filling of a
simple SBP specified format called
‘Borrowers Basic Fact Sheet’
[BBFS]”
· Effective
communication of the
credit requests.
This alienation is a big loss to the
bank as it is only the field staff that
can generate good quality asset
leads to the bank. No matter how
much pressed they are for targets,
they are helpless, unless they are
equipped with the tools of the
trade.
-----------------Do-------------
-----
· Better tapping of the market, in
the present competitive
environment.
· Improved service level of theclient.
If a random sample of 50 branches
is drawn across Pakistan, each BM
would have at least 2 quality SME
Assets lead, who is reluctant to
market those accounts, due to the
his inability to initiate credit at
branch level.
At present, credit officers in Region
Offices prepare the credit proposals
on behalf of branches and get them
signed by BMs. These teams can
hardly manage to process the
annual reviews. This is a case ofunderutilization of the human
resources placed at the Branches
due to skill deficit.
-----------------Do-------------
-----
· Efficient utilization of human
resource.
· Exponential growth in asset book
size and no. of account.
· No dependencies for credit
initiation at branch level.
Low preparedness levels also cause
field staff to become reactive
rather than proactive, leading to an
increased turnaround time causing
irritation or loss of the client.
Wrong presentation once done
Facilitating learning:
· Presenting quality
proposals.
· Financial Analysis and
Assessment.
· Better Service levels.
· High Retention of the existing
clients.
· Low Turn down rate.
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cannot be undone, altered or even
rephrased, resulting in either a
decline or an increased turnaround
time.
· Business Analysis
· Collateral Assessment.
· Security Perfection.
· Safeguarding Banks
Interest.
· Rational queries
Responses.
· Inherent Risks.
Approximately 20 to 25% fresh
credit proposals are declined due to
poor presentation, mis-
communication by the initiating
units, again due to skill deficit.
----------------Do--------------
---
--------Do-------------
At least 20 to 30% the sanctioned
goes un-disbursed, due to lack of the
required skill set and the pro-activity
required at the approval stage.
----------------Do--------------
---
High Disbursement to sanction ratio.
There is a gap that exists between
the intellectual levels of the
Approving/Risk authorities of our
field staff, which deteriorates the
annual reviews, fresh proposals.
Grooming our staff for:
-Soft Skills to interact.
International context and
standards.
-Enabling to make
Rational Responses to
queries.
Employee Empowerment.
Given the banks special focus on
increasing the SME portfolio, few
designated and Relationship
Managers/ Credit Officers in
controlling offices won’t suffice. It has
to have the field offices, made fully
capable of initiating credit.
Foundation level capacity
building program.
During the last three years,
approximately 800 MTOs have
been hired by the bank. Even if
one third of them are employed as
credit officers in branches, this
works out to be a Sales force of
250 qualified and enabled bankers
to initiate credit across Pakistanthrough more than 750 Branches.
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11 Due to the low preparedness level of
the field staffs, every recommending
body has to maintain its own back-
office/processing time, so as to
assure the quality of his signature,
which again adds to the overheads.
-----------------Do--------------
----
Productivity of Human resource
achieved.
BOTTOM LINE
Challenge
Aggressive Growth in SME assets.
Action
Absolute capacity
building of our 750 BMs
and allied field staff, to
enable them to Initiate,
Disburse, Manage &
Monitor SME credits.
Opportunity
Achievement of the goals by
empowering and enabling the
available resources.
A credit initiator needs to deal with at least 8 altogether different bodies. Getting these bodies aligned
obviously requires a basic skill set. The absence of this skill set impedes the asset growth to optimum
levels.
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· The credit disbursements employ the above flow map in our bank.
Each of the phases requires certain protocol to be followed by the initiator. There are certain “Dos and
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Don'ts” and “How to's” in accordance with the Credit Culture and psychology of the approving
authorities. Unawareness of these is an impediment to our goals.
Though we have a management development function operative for the bank, but that doesn’t
suffice the requirement of a target oriented and purpose-built capacity building program for SME book
building.
1.2 Approaches towards the Problem Statement
Most of our target audience would be in phase one that is [I know- phase]. Our capacity building plan
would aim at bringing them to the ultimate phase, i.e. [I will- phase] by empowering, unleashing their
capabilities to meet ABL’s strategic goals.
Target Audience
The target audience of the program includes BMs, Credit Incharges and credit officers placed in the
Branches. A conservative estimate of the
Head count for our training program is as follows:
Roles Head Count [Approx]
Branch Managers 750
Credit Incharges 750
Credit Officers 250
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1.3 Project Goals and Objectives
1. Optimize the skills and capacity of our field staff/BMs to reach our SME and commercial asset book
building targets.
2. Development of the workforce for SME assets by enabling around 750 Branch Managers and
around equal number of associated credit staff.
3. During the last three years, approximately 800 MTOs have been hired by the bank. Even if one
third of them are employed as credit officers in branches, this works out to be a Sales force of 250
bankers who can be converted in to SME Credits officers to initiate credit across Pakistan through
more than 750 Branches. The transformation could only be achieved through a capacity building
initiative program.
4. Assure that our field staff are enabled independently initiate a credit proposal, without any
dependency of RM/Credit Officer in the controlling offices.
5. Eliminate the alienation and reluctance of our branches to engage in credit initiation, by taking
them to the required preparedness levels.
6. Reduce the turn-around-time of annual reviews of the existing accounts, as well as fresh advances.
7. Appraise our field staff with the new credit culture of the bank, and to direct their energies to
attain the target levels of advances, within the credit risk framework of the bank.
8. Mold our fresh Management trainees posted in the field, into credit professionals, in much lesser
time.
9. Match the knowledge and skill levels of our field staff to that of approving authorities.
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1.4 Project Scope
Project Includes
1. A comprehensive and purpose-build capacity building plan to be rolled out across Pakistan
which includes:
Contextual Lectures.
Case base learning.
Role based learning.
Simulation of the overall credit disbursement and management cycle.
Understanding all the 6 phases and 8 stakeholders of credits in ABL.
Understanding the credit risk architecture of ABL.
Recent international developments in the perspective of Credit Risk. Credit risk in the context of BASELII Accord.
2. Lectures from Subject matter Experts [if required].
3. Assessment of the attendants at the end of the program.
4. Assessment of the training program by the attendants.
5. Other training requirement of the CRBG e.g. SME Products, Bancassurance etc.
1.5 Critical Success Factor
Top Management Support and Commitment.
Close monitoring and flexibly managed implementation.
Strategic focus.
1.6 Assumptions
This capacity building initiative would be an ongoing and continuous process to align with the
change management process.
Environmental resistance is an inherent factor to every change management process, and is
assumed to be surfaced with the launch of our Capacity Building initiative as well.
1.7 Other Benefits
An organization wide survey and feedback mechanism for continuous improvement.
A unit permanently dedicated and responsible for continual professional development and
change management.
A sustainable model of achieving our targets.
Employee motivation and accountability.
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1.8 Project Manager’s Profile
Arsalan Aqeeq is an qualified resource having around three years experience of managing
commercial and SME accounts of CRBG portfolio, with comprehensive understanding of almost all
the aspects of SME credits. As a Relationship manager, he has marked an YoY 100% increase in
existing fund based portfolio. Further to that, he has the honor of getting more than Rs 1100 Mn
approved in one year.
His experience is bolstered by an MBA-Finance from IBA, Karachi and an Engineering Degree from
NED University, Karachi. He have experience of conducting workshops and speaker sessions,
seminars and other professional development activities. He has served as a visiting faculty and a
corporate trainer for Business, Finance and Corporate Finance courses in premier business schools
and training institutions.