SBP to educate banks on SME lending

KARACHI: The State Bank of Pakistan (SBP) will pursue and educate commercial banks to extend loans to Small and Medium Enterprises (SMEs) on cash flow basis under the newly implemented Prudential Regulations for SMEs.

This was stated by the Deputy Governor State Bank of Pakistan (SBP) Tawfiq A Hussain while responding to the complaints from SME sector at the first meeting of Task Force for SME policy development at Islamabad on Tuesday.

According to a member of the Task Force who attended the meeting, the Deputy Governor said that the Central Bank would also take action against those banks that are not providing credit to SME sector despite the implementation of prudential regulations.

Secretary Ministry of Industries and Production Javed Ashraf Husain chaired the meeting which was attended by Deputy Governor of SBP, heads of SMEDA, SME Bank, representatives from Ministries of Finance, Commerce, Planning Division, Labour, additional chief secretaries of four provinces, VC EPB, FPCCI, convener of UNISAME, Pakistan Small Industries Association, All Pakistan Qaumi Tajir Ittehad, CEO Frontier Foundry Ltd and chairman Chenab Textile.

He said that these committees have been given a three months time to make recommendations for the approval of Task Force.

One of these committees will make recommendations for “business environment”, second for “resources and services” while third for “feedback mechanism”.

He pointed out that the meeting also finalised formation of one committee that will deal with challenges facing SMEs in the country.

Representatives of SMEs and private sector urged the Task Force to take immediate steps for facilitating 2 million SMEs instead of waiting for the implementation of development policies in the year 2005.

Secretary Industries Javed Ashraf Husain asked the committees to recommend measures, which are simple and enforceable.

Vice chairman EPB Tariq Puri suggested the meeting to go for cluster development.

The meeting also demanded to make a recommendation for defining the SME for lending purposes.

SBP deputy governor also suggested SMEs to look towards commercial banks for financing as they have sufficient funds and their mark up rates are lower.

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