The Central Bank of Bahrain (CBB) is committed to supporting finance for the small businesses, said a top official at a conference organised by the Arab Monetary Fund and International Finance Corporation in Manama.

'The CBB has licensed two providers of microfinance in the past three years,' said Khalid Hamad, the executive director of banking supervision.
 
'These are Ebdaa Bank and Family Bank. Both are specifically aimed at providing finance of up to BD3,000 ($7,957) to single person companies or small businesses,' he added.

'These banks are providing working capital and asset-based finance to allow small and medium enterprises (SMEs) to expand.'

He said the CBB had supported Tamkeen initiatives through relaxation of the risk weighting of lending by banks to SMEs from 100 per cent to 75 per cent in 2008.

The CBB, in realising the paramount importance of microfinance, has also started the development of a specific regulatory framework for such businesses and it is expected to be issued next year after the necessary consultation.

'I can't afford not to mention the role played by Bahrain Development Bank in developing the SMEs as the bank was the first to focus on this sector,' Hamad said.

'The CBB has also worked with the Benefit Company to widen the scope of the Bahrain Credit Reference Bureau to include SMEs and larger companies.

'Lenders will have access to credit information on not only consumers but also companies.

'This initiative should widen the availability of credit to smaller businesses and help improve the credit quality of banks' credit portfolios.

'The CBB intends to include single person companies under the umbrella of its conduct of business requirements applicable to consumer finance so they will enjoy greater protection.

'The CBB does not have any direct supervisory responsibility for smaller businesses.

'Nonetheless it recognises the importance of SMEs to the economy and we have sought to provide what measures we can to ensure their financing needs are met efficiently,' he added.-TradeArabia News Service