SBP asks banks to promote refinance facilities

KARACHI: The central bank on Wednesday asked banks to promote refinance facilities available for small and medium enterprises (SMEs) to purchase plants and machinery.

Samar Hasnain, executive director of the State Bank of Pakistan (SBP) said the central bank has put in place number of refinance facilities both for purchase of plant and machinery for SMEs and working capital finance for special sectors.

“Banks have been instructed to inform SMEs about their facilities,” Hasnain said. He was addressing meetings with manufacturers and exporters belonging to SME sector and bankers based in Sialkot, a statement said. The SBP’s director also urged the SMEs to take a step ahead and approach nearby bank branches to know about SBP’s facilitates available for them.

“In terms of numbers, most of the entities in your region are SMEs. If you want to graduate from indirect exporter to direct exporter, you can modernise and expand your plant and equipment by availing SBP’s refinance facilities for modernisation,” he said.

Hasnain encouraged the SMEs to avail SBP’s refinance facility for renewable energy to overcome power problem. “SMEs can also use SBP’s subsidised refinance facility for setting up silos, cold storage facility and warehouses.”

The SBP’s official assured the SMEs that SBP-Banking Services Corporation-Sialkot will be taking stock of the financing extended to SMEs and “progress in this regard will also be monitored closely”.

SBP’s policy for promotion of SME finance ensures improving regulatory framework, upscaling through microfinance banks, risk mitigation strategy, simplified procedure for SME financing, program based lending and value chain financing, capacity building and awareness creation, handholding of SMEs – non-financial advisory service, leveraging technology to promote SME financing and simplifying taxation regime for SMEs.

In 2018, SME financing was recorded at Rs513 billion compared with Rs450 billion a year earlier. Alone, the SME financing grew 25 percent in the July-December period of last year.

The substantial increase in SME financing is mainly attributable to implementation of the policy for promotion of SME finance issued by the SBP in December 2017.

Under the policy so far more than 2,500 bankers have been trained through training institute of the central bank.