Credit rules being revised to facilitate SMEs2 min read

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ABBOTTABAD:  Significant changes are being made in prudential regulations to make it easier to acquire loans, especially by small and medium enterprises (SMEs), as the State Bank of Pakistan (SBP) has set a target to increase SME financing from 6% to 17% over the next five years, said a central bank official.

SBP Development Finance Support Unit Assistant Chief Manager Rabeha, while speaking at a seminar organised by the central bank in collaboration with the Abbottabad Chamber of Commerce and Industry, said an increased number of borrowers from the SME sector would be accommodated for which a borrower fact sheet was available.

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“The target time for the disposal of local loan applications has been fixed in the range of 15 to 25 days for the small and medium-sized entrepreneurs,” she revealed.

She pointed out that now all kinds of financing facilities were available with commercial banks and special emphasis had been laid on disbursing industrial and agricultural loans. The assistant chief manager emphasised that efforts were being made to encourage the business community to increasingly rely on the banking sector as currently only 6% of SMEs were taking loans from banks.

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“We have set a target to raise the level to 40% as the small-scale sector is the only area which can give a boost to the country’s economy,” she remarked. Citing an incentive for the borrowers, she said now movable assets could also be pledged as security, which would be a major source of attraction for the business community as a large number of entrepreneurs could not avail themselves of the facility due to strict conditions.

She also made a presentation on the various initiatives undertaken by the SBP to increase the outreach of financial services to various sectors of the economy, particularly the areas of agriculture and microfinance, and to improve the capacity of banks to reach the areas without banking facilities. She called on the seminar participants to enhance the communications level for achieving real benefits of modern banking.

Published in The Express Tribune, November 8th, 2018.

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