SBP mulls financing for SMEs without collateral

ISLAMABAD: The government on Thursday agreed to provide seed money to a new financing scheme for small and medium enterprise (SME) sector proposed by the central bank.

Federal Minister for Finance and Revenue Shaukat Tarin said the provision of microcredit will create employment opportunities at the local level.

“[It] will enhance GDP growth and will help in achieving sustainable and robust economic growth,” Tarin said during a meeting with the Minister for Industries and Production Khusroo Bakhtiyar. Special Assistant to Prime Minister on Finance and Revenue Waqar Masood was also present during the meeting. Governor State Bank of Pakistan Reza Baqir joined the meeting through video link.

Baqir briefed the meeting about the proposal for the provision of funds for the small businesses (without collateral) for a tenure up to 3 years through the network of commercial banks.

“The banks will design innovative products to reach out to the smaller businesses whereas the government will provide risk sharing facility to the banks,” he said.

SBP governor said there are around a hundred thousand small businesses availing the SME credit facilities provided by the commercial banks. The new scheme will accelerate the credit uptake ratio of the smaller businesses up to 30 percent approximately during three years, he said.

Federal Minister for Finance and Revenue, Mr. Shaukat Tarin, presided over a meeting on Youth Entrepreneurship Scheme (YES) at the Finance Division today. SAPM on Youth Affairs Usman Dar, Governor State Bank Dr. Reza Baqir and other senior officers also participated in the meeting.

The ministry of finance and SBP introduced the mechanism to support bank lending to SMEs and small businesses to avail SBP’s refinance facility to support employment.

Meanwhile, minister for finance presided over a meeting on youth entrepreneurship scheme. During the meeting, the tiers of youth entrepreneurship scheme program were reviewed with a view to ensure maximum flexibility in provision of loans with minimum administrative costs. Due diligence will be exercised with a key focus to offer subsidized loans to young entrepreneurs for self-employment schemes. The Kamyab Kissan project was also discussed during the meeting which will be placed under the banner of Kamyab Jawan program.

The finance minister stressed to chalk out Kamyab Kissan program to extend credit facility to farmers across the board. It will promote youth engagement and employment in the agriculture sector.

“Kamyab Kissan program will revolutionise the agricultural productivity and usher in a new era in agro-based industrial progress,” he said.