Karandaaz Pakistan and Meezan Bank have signed an agreement for Corporate Vendor and Distributor Finance Program for providing PKR 9 billion to corporate vendors and distributors in Pakistan. The aim of programme is to providing growth capital for small businesses. Under this programme capital investment and expansion working capital will be made available to the small and mid-size distributors and vendors in organized economic supply chains in Pakistan.
The program has been launched with the expectations of increasing the culture of small business in Pakistan that has been decreased gradually in past five years due to commercial banking. During 2008-9, SME share in commercial banking was 17% that is now 6% by 2015.
Speaking at the signing ceremony, Mr. Asad Azfar, Chief Investment Officer of Karandaaz Pakistan stated: “It is critical for broad based economic and employment growth in Pakistan that this credit contraction is reversed and brought in line with comparable international benchmarks (20-30% of banking assets). It is also crucial for commercial banks to develop viable credit models to lend to this vital agent of the economy”. “The partnership with Meezan Bank is a first step in this direction and will enable apex Corporates to direct credit to vendors and distributors that are well-positioned for growth without assuming credit risk”, he added.
The Deputy CEO and Executive Director of Meezan Bank, Mr. Ariful Islam expressed his commitment towards the achievement of program and fulfilling the agreement successfully with Karandaaz Pakistan. He said, “The program has the potential to generate important strategic value for participating corporations by strengthening supply chains and distribution channels through providing access to finance; generating efficiency through greater economies of scale in supply chains and distribution channels; increasing corporate value by facilitating access to finance and banking relationships and reducing corporate balance sheet exposure.”
“Meezan Bank, true to its commitment towards maintaining healthy bilateral relationships with majority of corporate customers in Pakistan, has not only proposed to broaden the vista of this program through the addition of distributors but has also recruited dedicated resources to ensure smooth operations and management of the program. Through this tripartite deal, the bank aims to contribute towards SME financing in Pakistan and cater to the growing void in cash flow lending for this sector,” he added.
Karandaaz Pakistan is a company in Pakistan that is sponsored by United Kingdom’s Department for International Development and Bill & Gates Foundation.