1. Credit Bureau & SMEs Lending in Palestine Ali Faroun The World Bank Strengthening Accountancy as a Foundation for MSME Sector Development and Job Creation Dead Sea Resort Area of Amman, Jordan June 18-20, 2013

2. Palestinian Banking System Banking System as end of March/ 2013 Network of 232 branches & offices Consists from 17 Banks Credit/ Customers Deposits ratio 54% Total Deposits 8.3 Billion USD Total Credit Portfolio 4.1 Billion USD Total assets ~ 9.9Billion USD Total number of MFIs (13) Total number of MFIs branches (75)

3. Develop Credit Registry system Develop Credit Scoring system Develop Bounced Checks system Develop Mortgage & Housing system SMEs Database (under development) PMA Credit Bureau Systems

4. Development Challenges Willingness and Support Coordination Human Resources IT Systems Demographic and financial data Reporting Reporting Threshhold. Consent Clause Kick – off Date

5. Success Elements Data Accuracy Data Completeness Data Updating

6. Systems Features Online real time 24/7 Hybrid business module Response time within millisecond Zero reporting threshhold Updated demographic & financial data daily basis Two methodologies of credit rating (Manner of payment, score card) Assign Credit Score for each Borrower and Guarantor, PD within 12 months, Risk grades & Reason code Customer classification on Bounced checks system Credit Registry & Credit Scoring systems

7. Cont…. Results: Adoption of modern and appropriate CR combined with quality of credit information can allow lending institutions to: Manage and mitigate credit risks Increase lending volume Accelerate access to finance Generate profits Improve the economic situation Lower cost of credit for good payers Reduction in credit shopping multiple lending, over- indebtedness Improvement in borrower's responsibility and behavior

8. Encourage SME lending Conduct conference in Feb, 2013 aim to Empower SMEs in Palestine Initiate appropriate definition for SMEs Establish Committees to enhance SMEs Technical committee led by PMA National committee led by Ministry of National Economy Encourage SME lending by providing banks with incentives to increase their SMEs credit portfolio (Waive the 10% of down payment for rescheduled loans, waive the 2% of general risk reserve requirements on the total SME credit portfolio) Running Projects: SMEs Database

9. Banks Credit portfolio up by 129% Achieved Results Banks Credit Portfolio #of Borrowers up by 51% Thousand Million

10. 37 #of Borrowers up by 112 % MFIs Credit Portfolio MFIs Credit portfolio up by 86% Cont…. Thousand Million (Average loan size is 3000$)

11. Number of SMEs up by 34% SMEs VS Large enterprises SMEs Credit Portfolio Cont….

12. SMEs Portfolio up by 57% Total Portfolio According to the size of Enterprises Cont….

13. (57%up by ) (up by 70%)

14. The Impact of Credit Bureaus in Job Creation Module Conducted by IFC in collaboration with PMA Study inputs & Assumptions Loan size up to 1$m per borrower Loans used in in industrial, services and trade sectors CAPEX Loans Average weight of credit reporting Gross Fixed Investment per Labor unit Expected Additional Direct Jobs to be Created in 2013 about 6,359 Create about 12% of total jobs required from the government

15. 15 Thank You For further information, please contact: Palestine Monetary Authority Nablus Street, AL-Bireh Ramallah, Palestine Tel. +972 2 2415253 Fax.+972 2 2407074 Email: afaroun@pma.psafaroun@pma.ps Website: www.pma.pswww.pma.ps