IFC Report on Guidelines for Profitable SME Banking in Developing Countries

SME Banking Knowledge Guide by IFC provided certain guidelines for helping banking industry in developing countries. It helps in designing successful strategies and products for small and medium enterprises.

There had been many transitions in SME banking. There are more emerging market banks which helped in developing and creating SME units. There was a rise of 271 percent of IFC’s committed portfolio of investments in SME financial institutions over the last five years which was amounted to $6.1 billion as of end of the fiscal year 2009.

Success factors for SME banking operations with profit are given in the publication of IFC. It also provided certain steps to be taken by bankers in the developing world for implementing a robust SME banking strategy. It also gave tips for financial services providers to develop and expand their SME operations. Importance of access to financial services for these economically important small and medium enterprises was also explained.

More than 90 percent of registered companies in the world accounted for small and medium enterprises. These were found to be an economically important sector in almost every country. Economic growth and job creation were the most important characters of SMEs.

It is necessary for SMEs to depend on financial services in order to meet their capital needs. However, it was thought that high credit risk and services costs were presented by SMEs. It was found that SME banking operations could be improved by right focus, specific products and better use of innovative lending technologies.