A Prospect for Islamic Banks for Financing in SMEs via Pakistan Post Offices in Rural and Sub-urban Areas
By: MEHBOOB UL HASSAN
Journal of Islamic Banking & Finance Jan-Mar 2009
Abstract
More than half century after Pakistan’s independence, Small and Medium Enterprises continues to face the inadequate financing from traditional financing institutions; rather this sector is key player in economic development and social prosperity. This paper aims to further highlight the significance of financing towards SMEs in a collaborative form of Islamic banks and Post Offices, because conventional banks and financial institutions have complex loan approval, confirmation and dispatch procedure. There is an immense prospective for Islamic banks for financing in SMEs, as this segment has been neglected for a long time and is still untapped by the conventional banks and authorities. Post Offices have a deep-rooted branch network all over the country; hence can be an ideal partner for Islamic banks to perform as representative or franchised branch for financing SMEs. This strategic collaboration would certainly overcome the SMEs’ capital shortage problems and improve the economic infrastructure and social conditions of the rural and suburban inhabitants. Furthermore, this proposed collaboration will not only make the financing procedure more brisk but also results in economies in different administrative costs of Islamic banks and increase in Post Offices’ incomes.
Contents
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