SBP to work with business community to increase financing for SME sector
The State Bank of Pakistan (SBP) is working on a new
strategy to expand financing for small and medium-sized enterprises (SMEs),
with greater emphasis on value-chain financing and stronger support for
businesses struggling to access formal credit.
SBP Chief Manager Ansar Iftikhar Butt said on Monday
that the proposed strategy would focus not only on providing financing to SMEs
but also on helping them navigate the requirements needed to obtain and
effectively use bank credit.
Speaking during a visit by an SBP delegation to the
Lahore Chamber of Commerce and Industry (LCCI), Butt said the central bank
wanted to work closely with the business community to identify sectors and
companies where SME financing was most urgently needed.
He suggested that large companies could play a key role
in easing financing constraints by providing guarantees for SMEs within their
supply chains. Such arrangements, he said, could help address documentation and
other hurdles that often prevent smaller businesses from securing bank
financing.
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Butt also proposed that the LCCI nominate a focal person
to coordinate SME-related issues. The SBP and the chamber could then work
jointly to identify problems and develop financing solutions for small
businesses.
He stressed that making SME financing more effective was
vital for sustainable economic growth and employment generation.
Business community seeks alternatives to collateral-based lending
LCCI Acting President Tanveer Ahmed Sheikh urged the SBP
to move beyond traditional collateral-based lending and introduce alternative
financing models that could make credit more accessible to SMEs.
He proposed the use of local letter-of-credit (LC)
models and insurance-backed financing mechanisms to broaden funding options for
small and medium-sized businesses.
Sheikh also highlighted serious financing difficulties
confronting the textile sector, particularly in obtaining bank credit and
opening LCs.
“Banks are not ready to provide even a single rupee of
financing to the textile sector,” he said, warning that the situation was
adversely affecting industrial production and export activities.
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He called on the SBP to take immediate and practical
measures to address financing constraints facing the textile industry and other
major industrial sectors.
LCCI proposes permanent SBP desk
The LCCI acting president also proposed establishing a
permanent SBP desk at the chamber to enable businesses to raise financing-related
cases directly with the central bank.
Such a facility, he said, would help resolve banking
issues more quickly and reduce unnecessary delays faced by businesses.
Sheikh further called for the procedures under the Asaan
Karobar Scheme to be simplified so that a larger number of small and
medium-sized enterprises could benefit from the facility.
The meeting also covered a broad range of issues,
including SME and value-chain financing, difficulties faced by textile
businesses, LC openings, alternative lending models and the provision of
banking services to the wider business community.
The discussions point to growing efforts by regulators and business
representatives to develop financing models that can move beyond conventional
collateral requirements and bring more SMEs into the formal credit system.
Source:
Urdu Point