A 10-point plan aimed at improving small and medium enterprises’ (SMEs) access to sustainable and convenient financing options has been proposed by the Bahrain Association of Banks (BAB).

Presenting the proposal, Dr Waheed Al Qassim, the chief executive of the association, urged the Central Bank of Bahrain to continue supporting banks, thereby enhancing their capacity to offer soft loans to SMEs.

Speaking during a meeting with stakeholders from the government and private sectors, the official said Benefit, the operator of the national electronic fund transfer system and the national ATM and point-of-sale switch, should establish a credit rating system for SMEs.

Dr Al Qassim also called on insurance companies to collaborate with Tamkeen for introducing a portfolio ensuring compensation for affected parties, including banks, in case of defaults.

He further said Article IV of the Labour Fund Law ‘Tamkeen’ No. 57 of 2006 should be revised to expand the fund’s financing scope from Islamic banks to include all Bahraini banks.

Criterion

The association chief proposed that SMEs be redefined by removing the criterion of “number of employees” and instead focusing on factors such as annual revenues, business performance indicators, and other relevant metrics.

Audit reports should be classified, starting with small-scale and one-person establishments, he said. The aim is to create simplified reports, enabling project leaders to grasp accounting methods and differentiate personal accounts from institutional ones.

Dr Al Qassim suggested that specialised units be established within banks, trained to assess and execute SME financing applications and that a dedicated academy ought to be created to train individuals managing SMEs.

Finally, he proposed that stricter regulations and laws be enacted to safeguard the rights of banks and financial institutions supporting SMEs.

The BAB believes that these proposals will help to make SME financing more accessible and affordable, and will encourage banks to lend more money to SMEs.

This will boost the growth of the SME sector, which is a vital part of the Bahraini economy.

 

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