FAISALABAD: Small & Medium Enterprises (SME) policy of State Bank of Pakistan (SBP) will play a pivotal role in providing congenial environment to 3.2 million registered SMEs to play their productive role in the overall development of Pakistan, said Tasleem Qazi Director DFSD, SBP Karachi.
He was addressing the first awareness session on SME Policy of SBP in Faisalabad Chamber of Commerce & Industry (FCCI) here today. He underlined the importance of SME sector and told that its share in national export is 30 percent that is also contributing 25 percent towards the manufacturing of export oriented items. Similarly the SME sector was also providing 78 percent jobs to industrial workforce of Pakistan. He told that there are thousands of unregistered SME units’ in addition 3.2 million registered ones which could help Pakistan to overcome its increasing trade deficit. “However we have to provide them maximum incentives to achieve this cherished objective”, he added.
He told that out total registered SMEs 90 percent fall under the category of sole proprietorship and SBP is making serious efforts to help these units to grow and become big units as early as possible. He further told that out of these, the owners of 6 percent units are already getting bank loans while 40 percent of them are dealing with the banking sector. He said that majority of the remaining are shy of getting bank loans on the apprehension of falling prey to the tax net.
Continuing, he told that in 2006 the share of SME sector in total portfolio of private credit was 17 percent which has been reduced to 8 percent in 2017. He told that SBP has designed SME policy to provide easy access to these units to enjoy hassle free access to the capital. “This policy has 9 pillars including improvement in regulatory framework, up scaling through microfinance bank, risk mitigation strategy, simplified procedure for SME Financing , program based lending and value chain financing, capacity building and awareness creation , handholding of SME – non financial advisory services and simplifying taxation regime for SME”, he added.
He told that SME sector is getting 8 percent share from the total private credit while number of those getting benefits out of it are 174,000. He told that SBP is making serious endeavors to increase their numbers to 500,000 by 2020. He told that 17 percent of the available capital has been allocated for SME sector which will be Rs 850 billion. He said that necessary instructions have also been issued to banks to facilitate the SME sector. He told that necessary instruction has been issued to banks to facilitate the SME sector and from January this year, the retail portfolio of different banks will be allocated on the basis of provinces which will be devolved to district level in later phase. “Similarly an equitable amount will be allocated for male and female entrepreneurs”, he added. He said that SBP is also considering a proposal to upgrade microfinance bank into full-fledged SMEs banks. “The limit of SMEs loan will also be increased from Rs.0.5 million to Rs.1 million”, he added.
Giving detailed presentation on SME policy, he told that the banks have been directed to process the SME loan application as early as possible and in this connection; the processing period for loan applications has been reduced from 30 to 15 days only. However, the applications of medium sized units will be processed within 25 days. “In case of non acceptance of application, the banks will be duty bound to give a cogent reason for the rejection of application”, he said. He further told that National Institute of Banking & Financing has also been directed to provide necessary training to the bank staff dealing with SME sector. “Meanwhile SMEDA has also been taken on board to provide much needed training to the concerned staff of various banks”, he said and added that State Bank of Pakistan, Security Exchange Commission of Pakistan and SMEDA are also collaborating to facilitate the SME sector.
Tasleem Qazi said that a centre of excellence will be established for SME sector. “It will remain in touch with the global SME sector and any new development in this sector would be immediately passed on to the concerned quarters.