KARACHI: Banking sector follows a uniform definition of small and medium enterprise (SME) sector while disbursing concessionary loans under a COVID-19 support, the central bank’s governor said on Wednesday.
State Bank of Pakistan (SBP) Governor Reza Baqir said the issue related to definition of SMEs has been resolved.
“All the [relevant] institutions are following the uniform definition,” Baqir said in a meeting with businessmen participated through video link from all the major cities. “Banks have approved requests amounting to Rs21 billion for SMEs and small corporate to support payment of salaries and wages to their workers and employees.”
Baqir said the refinance scheme was launched as a risk-sharing initiative to facilitate SMEs during the ongoing difficult times and minimise the negative impact on numerous businesses caused by the outbreak of coronavirus.
Governor Baqir said SBP has created teams of focal persons and senior officials of all the banks in all the 15 cities. These teams will primarily be responsible to address issues faced by businesses in availing the financing under SBP Rozgar scheme in all the cities of the country clubbed in to 16 groups. They will liaise with Chambers of Commerce and other trade bodies to listen to their suggestions as well. The SBP governor said facilitation of business community is a priority of the central bank particularly for its ongoing measures taken to combat the impact of COVID-19 pandemic. He briefed the participants about the SBP major refinance schemes for payment of wages and salaries to prevent layoffs and relief package for the deferment of principal amount and restructuring of loans and their progress.
“SBP is also contemplating to extend the scheme further as it understands that the businesses are still facing challenges due to impact of COVID-19 on daily lives of common people,” he said. “SBP stands ready to take every possible measure under its mandate that can facilitate the businesses to overcome the difficulties faced by them.”
Karachi Chamber of Commerce and Industry (KCCI) President Shahab Ahmed urged the SBP to publicise details of all the companies who availed the refinance scheme to make it transparent.
“Otherwise, it is likely that the banks will be accused of giving loans to their favourites and undeserving,” Ahmed said in a statement. “Some highly influential people having good contacts in the banking sector have an easy access to financing facilities, but a large segment of society remain deprived.
KCCI president said there is a need to ease the criteria and paperwork for loan disbursement to allow maximum people to benefit from the facilities and survive in the extremely difficult and extraordinary situation.
“SBP’s refinance facility offers loans at an attractive interest rate of just 3 percent but many people simply don’t want to pay any interest,” he said. “The State Bank must look into the possibility of launching another refinance facility with zero percent mark-up which would certainly provide huge support to the business community in distress.”
Since the lockdown imposed by the government in March, the SBP took a number of measures to mitigate the impact of COVID-19 on the economy, including an extension in repayment of loan principal amounts by one year, concessional financing for businesses to procure equipment. It’s earmarked at least Rs100 billion for emergency measures.
Traditionally, banking sector has been risk-aversive to loan SMEs that constitute approximately 90 percent of businesses in the country, employ 80 percent of the non-agricultural labour force and contribute 40 percent in country’s annual GDP.
