What Are The SME Banking Services Provided By Commercial Banks in Bahrain?

by Naveed A. Writer
Commercial Banking

SME Banking relates to the provision of banking and financing services to small and medium enterprises (SMEs). Some of the important areas covered by SME banking include working capital, overdrafts, export and import finance, guarantees, short- and long-term loans etc.

But, before we explore banking and financial services offered to SMEs, let's take a look at some SME facts in Bahrain.

SME Banking - Commercial Bankin in Bahrain

What is the SME scenario in Bahrain?

  • In December 2017, the Ministry of Industry, Commerce, and Tourism (MoICT) revised the definition of SMEs to those companies that don't exceed 100 employees or BD 3 million in turnover.
  • About 90% of Bahraini enterprises are SMEs and their contribution accounts for about 30% of the Kingdom's GDP.
  • SMEs represent about 99.3% of the total number of local companies in Bahrain.
  • Commercial Banking contributes to 8% of Bahrain's exports.
  • There are more than 6,300 SMEs in the country, of which about 3,000 are run by women.
  • As per the Financial Stability Report issued by the Central Bank of Bahrain (CBB) in March 2019 (Issue No. 26), credit extension to SMEs increased as SME loans (as % of total loans) were at 2.0% in December 2018 compared to 1.7% in June 2018. 
  • SME non-performing loans also decreased during the same period to 9.7% down from 9.9%. Provisioning levels also recorded a decrease from 56.2% in June to 48.6% in December.

How is the government supporting the SME sector in the Kingdom?

  • Bahraini SMEs enjoy a 10% quota on auctions for service facilities at government institutions.
  • And, in July 2019, Bahrain's Cabinet announced that 10% of all public contracts will now be reserved for SMEs.
  • In December 2017, the SMEs Development Board was established. It aims to coordinate the efforts of the MoICT, Economic Development Board (EDB), Labor Fund – Tamkeen, Bahrain Development Bank (BDB) and the Bahrain Chamber of Commerce and Industry (BCCI) to foster the growth of the micro-enterprises, develop SMEs to create more jobs for citizens and increase the SME sector's contribution to the country's GDP.

What are the SME Banking facilities available in Bahrain?

  • Banks in Bahrain offer SME banking and finance facilities through both conventional and Islamic banking channels.
  • Ahli United Bank, for example, offers a bouquet of conventional SME banking services including business banking, supplier finance, equipment, machinery and fleet finance, business premises finance, school fee collection service, LMRA easy pay service, corporate cash collection service, and salary transfer service through it's SME team.
  • On the other hand, Kuwait Finance House, Bahrain, for instance, offers Islamic banking SME services such as enterprise financing products which offer a 50% subsidy through a partnership with Tamkeen including working capital, trade finance, auto and equipment financing through Murabaha financing and equipment and project financing through Ijara financing.
  • Another example is Ebdaa Bank, established in 2009, that takes the microfinance route and finances micro businesses up to BD 5,000 through both conventional and Islamic routes. The bank’s prime objective is to support low-income families and contribute to socio-economic empowerment by providing micro-credit opportunities to loan-income Bahrainis.

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About Naveed A. Freshman   Writer

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Joined APSense since, February 6th, 2020, From SFO, United States.

Created on Feb 11th 2020 03:31. Viewed 956 times.


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