Fina Bank, currently linked to the Bankom network, launched its operations in Uganda in October 2008 to join the other 23 banks that are operational in Uganda. Scola Kamau spoke to Mr Shamsher Khemani, the executive director of Fina Bank about the one year bank's trend and the future prospects in the SMEs banking.

Why SME banking and not any other area?

Fina Bank decided to choose the SME sector due to the gap that was created by businesses that had outgrown the micro finance capacity and yet they were still not big enough to be serviced by the commercial banks. SMEs comprise a significant part of Uganda's economy so we decided to get involved in this area to support these businesses to grow to full potential by offering specialised products, dedicated service and expert advice.

You want to be recognised as the leading SME bank that encourages entrepreneurship, with reputation for providing a proactive and personalised service, how will you ensure that you succeed?

Being a start up in the industry, we know success will be realised over a period of time. Our model of operation that focuses on dedicated relationship management helps us become partners with the businesses we work with hence the ability to understand our customers better and as such provide a service that meets both the customers and bank needs

Most of the SMEs are unstructured businesses so it is difficult for us to access the required information. Therefore, we emphasise on extensive training to our relationship teams to be able to discuss with businesses so as to understand their structure and eventually come up with solutions, which then end up into a win/win situation.

What business population are you lobbying?

SME definition is wide and covers all types of business such as sole proprietors, partnership or limited liability companies. It could be manufacturing or trading. Therefore, we have no restrictions as such either in terms of nature of business or type as long as they are not involved in any illicit activities.

Most SMEs do not have security/ collateral. How do you deal with loan risk management?

Our business model operates on the principle of serviceability and ability to repay rather than a focus on security and that's what makes us unique. Secondly, by understanding the unique nature of each business, we are able to recommend alternative security and not remain hooked to the standard immovable security.

We have options such as personal guarantees, charge on assets, and many other forms of alternative security which help us ensure we are able to serve our customers as opposed to creating reasons as to why we cannot serve them

The capital base for SMEs is always small. Do you have a maximum lending amount? At what interest?

Well, Fina Bank Uganda is part of Fina Banking Group, which has been in existence for last tha 20 years. We are a full commercial bank with the required capital base. We support SMEs but can also offer our banking services to others. We have corporate and retail departments as well. As such, we do not have a minimum loan amount but look at each individual on a case by case basis and make recommendations according to the size and nature of business.

What is the payback period?

Payback period is again pegged to each unique business and the nature of the request from the customer. We review each application independently and make recommendations for each request. However, considering the nature of SME we normally prefer to do short term renewable financing. This enables us to judge customer ability to repay.

How many branches do you have in Uganda and in the region as a whole?

In Uganda, we have four branches and two more are opening shortly, which will make total number to 6 before the end of this year. We have a total of 20 branches in the region.

Since October 2008, what achievements have you apprehended?

Since we commenced operations, we were able to establish stable infrastructure and innovative products. The response has been overwhelming, which resulted in rapid increase in volume. This requires continuous investment in technology and capacity to serve.

What challenges are you facing as a leading SME bank in encouraging entrepreneurship?

We need to promote awareness among the business community by partnering with other agencies. This is a vast area and needs a lot of effort in addressing such issues. SME needs to be educated to structure their businesses in order to expand.

The government has to also play its role. We have been approached by many international organisations to share their expertise in this sector but again they all expect us to take the initiatives, which require capacity. Opening branches in dense SME market area is also a challenge not only to identify suitable premises but also the cost.

What are Fina Bank's future plans in the SMEs?

Fina Banking Group will continue to focus on SMEs but at the same time, target other sectors in order to promote the image of a complete bank. We intend to expand our regional presence and also local presence by expanding delivery channels through branch network and innovation like internet and SMS banking.