Entrepreneurs have urged the government not to privatise the SME Bank, saying if privatised the bank will lose sight of its purpose in pursuit of financial gains.
The SME Bank has been on the agenda of the privatisation board. Previously, the government had planned to merge the SME Bank with the National Bank of Pakistan (NBP) but later on decided to privatise it completely.
“In both the cases, the bank for small-medium enterprises will lose its standing,” said Bridge and Connect CEO Minnat Nasser.
“It will lose its initial objective to provide loans to small businesses, as private banks rather prefer financial gains.”
It does not make much sense for private banks to deal with small-medium enterprises especially small and micro businesses, she said, adding, “Private banks ask them for their credit history and collateral which they do not have.”
“Several small business owners do not even own a house as they invest the money in their businesses instead of tying up capital in the purchase of a house.”
“If you analyse, you will find that the corporate sector despite having more defaults on debts, still gets loans from the banks,” the CEO added.
Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver urged the State Bank of Pakistan (SBP) not to privatise the SME Bank and to inject more funds in it.
“The SMEs are a vast sector and the SME Bank is the only bank to facilitate the sector; and if it is merged with any other bank, it will lose its identity,” he added.
If the bank is privatised it will be governed by private sector investors who may behave like other commercial banks whereas, if it continues to remain as a public sector bank it will follow the agenda of specifically catering to the sector.
“If the central bank is not inclined to inject funds, then it may allow the SME Bank to raise its own capital from the investors by floating shares,” he suggested.
Thaver said now that the economy is getting back to normal, the SBP also needs to take proactive steps to announce the restructuring of SME Bank without wasting time.
Published in The Express Tribune, August 23rd, 2020.
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