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Getting Credit Indicator-Ease of Doing Business Pakistan. State Bank of Pakistan. Outline. Pakistan Ranking Ease of Doing Business Methodology Reforms underway Discussion on the survey questionnaire Way forward. Ease of Doing Business Index.
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Getting Credit Indicator-Ease of Doing Business Pakistan State Bank of Pakistan
Outline • Pakistan Ranking • Ease of Doing Business Methodology • Reforms underway • Discussion on the survey questionnaire • Way forward
Ease of Doing Business Index • World Bank issues ease of Doing Business Index each year (190 countries in 2019). • The index comprises 10 indicators including Getting Credit Indicator • Starting a Business • Getting Credit • Dealing with Construction Permits • Getting Electricity • Registering Property • Protecting Minority Investors • Paying Taxes • Trading across Borders • Enforcing Contracts • Resolving Insolvency
Pakistan- EODB Ranking 2019 Rank 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year The World Bank
Pakistan- EODB Ranking 2019 • Pakistan ranks 136 on EODB index • Pakistan improved 11 notches on the EODB 2019 compared to EODB 2018 • Improvement in Starting a Business, Registering Property and Resolving Insolvency
EODB Methodology for Getting Credit • Getting Credit measures the legal rights of borrowers and lenders through two survey questionnaires: • Strength of legal rights(60% weight); and • Depth of Credit information (40% weight)
Getting Credit Indicator- Pakistan • Pakistan ranks 112 in Getting Credit Indicator for 2019
Strength of Legal Rights Index • The index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending • The index covers 10 aspects related to legal rights in collateral law and 2 aspects in bankruptcy law. • The index ranges from 0 to 12, with higher scores indicating that collateral and bankruptcy laws are better designed to expand access to credit.
Depth of Credit Information Index • The Index measures rules and practices affecting the coverage, scope and accessibility of credit information available through either a credit bureau (private) or a credit registry (public) • The index ranges from 0 to 8, with higher values indicating the availability of more credit information • A score of 1 is assigned for eight features if it is fulfilled either by a credit bureau or a credit registry or both • Score of 0 is assigned if; • credit bureau or registry is not operational; or • covers less than 5% of the adult population
Major Reforms in the Getting Credit Indicator • Licenses to two private credit bureaus have been issued by SBP • Data sharing between retail and utility companies with private credit bureaus to be allowed soon. • Establishment and operationalization of the e-Registry under STA 2016 is expected soon.
Case study Assumptions- Section 3 • ABC (the Debtor): • Is a Private Limited Liability Company. The company has 50–100 employees and is an incorporated entity. • Is 100% domestically owned. • Has its registered office and only operates in Karachi. • BizBank (the Creditor): • Is a commercial bank that is 100% domestically owned.
