Abstract:
This project analyzes and describes the banking needs of small enterprises and SMEs in Pakistan. It further indicates the problems due to which these organizations face difficulties to access credit from Islamic banks for expansion and meeting other important needs of their businesses. The study highlights that the most essential factor for the Islamic banks is to realize the requirements of SMEs of Pakistan for Shariah compliment products. Moreover it describes the methods to access Islamic finance and scrutinizing the role of Islamic banking in assisting the activities of small firms. It involves the evolution of Islamic banking industry and the instruments used to finance these organizations, outline key principles and perspectives of Islamic banking relevant to SMEs. It includes an overview of Islamic financial institutions and discusses those instruments that are helpful for the transactions and growth of SMEs, identifying the challenges that SMEs are currently facing in Pakistan in accessing credit from Islamic banks. In view of the research issue and objectives, this study conducted as a descriptive research. It utilizes the primary and secondary data to describe the perception of entrepreneurs towards Islamic financing to the SME sector provided by Islamic banks. The method of obtaining the primary data is mainly through structured questionnaires where convenient sampling of 87 Muslim entrepreneurs of 3 SMEs in Islamabad and Rawalpindi are selected in this study. The findings of the study show that Islamic banks are offering competitive services with respect to the banking environment, therefore establishing a positive impression in banking industry. But there is need to develop awareness among people about its products. On the other side, both SMEs (using Islamic or Conventional banking) are moderately aware about religious rulings associated with Islamic banking, and hence it found that there is not much influence of Islamic banking in SMEs. There is critical need to form an organization that finds new investment opportunities with the involvement of SBP.
