CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
CAPACITY BUILDING
INITIATIVE-SME
LENDING
May14,2008
PROPOSAL - Exposure
Draft
[email protected]
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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
In line with ABLs 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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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
1.1 Problem Statement
The following table describes the challenges faced by ABL, towards the optimization of SME credits asset books.
S
.
n
o
Challenge
Action
1The new credit architecture and
Facilitation
risk framework was introduced in
training
2005, but
modern
to
date
no
comprehensive capacity building/
training
program
has
been
conducted by the bank, to match
the
skill
and
Opportunity
to
through
grab
the
credit
framework.
-Decreased
Supervision.
-Improved credit management.
-TAT reduced.
Staff Renewal needed.
knowledge
requirements.
2Our BMs, and experienced field
staff, though very learned and
-----------------Do-------------
------------------Do--------------------
-----
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.
3Around 9 formats [CA, CM, Spreads,
Comprehensive hands-
-High turnover of credit proposal.
Projections, Stress testing, ESRA,
on
based
-High efficiency of human resource.
APR, PR checklist] have been
learning to enable them
-Branches enabled to raise credit
introduced by RMG for credit
to initiate credit reviews
proposal independently
reviews and initiations, which are
and
too sophisticated for our field staff,
proposals using all these
specially mid-age and senior branch
formats in greater details.
manager to learn. Lack of training
actually developed an alienation,
perhaps a reluctance to initiate
credit in our field staff.
simulation
fresh
credit
Training to include the
implications
significance
and
of
these
formats.
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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
It is important to quote the fact
Effective
that On average, proposals are
communication of the
atleast returned twice by the RMG,
credit requests.
just due inappropriate filling of a
simple SBP specified format called
Borrowers
Basic
Fact
Sheet
[BBFS]
4This alienation is a big loss to the
bank as it is only the field staff that
-----------------Do-------------
Better tapping of the market, in
-----
the
can generate good quality asset
present
competitive
environment.
leads to the bank. No matter how
Improved service level of the
much pressed they are for targets,
client.
they are helpless, unless they are
equipped with the tools of the
trade.
5If a random sample of 50 branches
is drawn across Pakistan, each BM
-----------------Do-------------
Efficient
-----
resource.
would have at least 2 quality SME
utilization
of
human
Exponential growth in asset book
Assets lead, who is reluctant to
size and no. of account.
market those accounts, due to the
his inability to initiate credit at
No
branch level.
initiation at branch level.
dependencies
for
credit
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 of
underutilization of the human
resources placed at the Branches
due to skill deficit.
6Low preparedness levels also cause
field
staff
to become
Facilitating learning:
reactive Presenting
Better Service levels.
quality
rather than proactive, leading to an proposals.
increased turnaround time causing
irritation or loss of the client.
Wrong presentation once done
Financial
Assessment.
High Retention of the existing
clients.
Analysis
and
Low Turn down rate.
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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
cannot be undone, altered or even Business Analysis
rephrased, resulting in either a
decline or an increased turnaround
time.
Collateral Assessment.
Security Perfection.
Safeguarding
Banks
Interest.
Rational
queries
Responses.
Inherent Risks.
Approximately
7
20 to 25% fresh
----------------Do--------------
credit proposals are declined due to
---
poor
presentation,
--------Do-------------
mis-
communication by the initiating
units, again due to skill deficit.
At
8 least 20 to 30% the sanctioned
----------------Do--------------
goes un-disbursed, due to lack of the
---
High Disbursement to sanction ratio.
required skill set and the pro-activity
required at the approval stage.
There
9
is a gap that exists between
Grooming our staff for:
the intellectual
the
-Soft Skills to interact.
Approving/Risk authorities of our
International context and
field staff, which deteriorates the
standards.
annual reviews, fresh proposals.
-Enabling
levels
of
Rational
to
Employee Empowerment.
make
Responses
to
queries.
Given
1
the banks special focus on
Foundation level capacity
During
increasing
0
the SME portfolio, few
building program.
approximately 800 MTOs have
designated
and
Managers/
Credit
Relationship
Officers
the
last
three
years,
been hired by the bank. Even if
in
one third of them are employed as
controlling offices wont suffice. It has
credit officers in branches, this
to have the field offices, made fully
works out to be a Sales force of
capable of initiating credit.
250 qualified and enabled bankers
to initiate credit across Pakistan
through more than 750 Branches.
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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
11
Due to the low preparedness level of
-----------------Do--------------
Productivity
the field staffs, every recommending
----
achieved.
Challenge
Action
Opportunity
Aggressive Growth in SME assets.
Absolute
of
Human resource
body has to maintain its own backoffice/processing time, so as to
assure the quality of his signature,
which again adds to the overheads.
BOTTOM LINE
capacity
Achievement
of
building of our 750 BMs
empowering
and
and allied field staff, to
available resources.
the
enable them to Initiate,
Disburse,
Manage
&
Monitor SME credits.
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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goals
enabling
by
the
CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
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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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
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 doesnt
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 ABLs 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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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
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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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
1.4 Project Scope
Project Includes
1.
A comprehensive and purpose-build capacity building plan to be rolled out across Pakistan
which includes:
1.5
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.
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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CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008
1.8 Project Managers 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.
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