CAPACITY BUILDING INITIATIVE-SME LENDING May14,2008

CAPACITY BUILDING
INITIATIVE-SME
LENDING
May14,2008
PROPOSAL - Exposure
Draft
Arsalan.aqeeq@abl.com.pk

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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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