The State Bank of Pakistan’s (SBP) SME Asaan Finance (SAAF) scheme will prove to be a game changer in enhancing access to finance for small and medium enterprises (SMEs) as it addresses the longstanding challenge of a lack of collateral faced by small units, said SBP Governor Dr Reza Baqir.
During his visit to the Multan Chamber of Commerce and Industry (MCCI) on Tuesday, the central bank governor highlighted the various initiatives taken by the SBP to facilitate businesses, particularly the SMEs.
Elaborating the importance of SME sector for the economy, he highlighted that the measures taken by the central bank included providing an enabling regulatory framework for SME financing, developing market infrastructure, raising awareness and enhancing capacity of bankers and SMEs.
Baqir emphasised that with the objective to stimulate sustainable economic growth, the SBP was playing its part to facilitate the business community.
“Some of the major initiatives include introduction of a unique collateral-free loan scheme for SMEs (SAAF), SBP’s concessionary refinance schemes for different sectors and measures taken to combat the impact of Covid-19,” he said.
Moreover, the central bank worked on digitisation of the banking system and persuaded banks to enhance financing to the business community, particularly to the priority sectors, he added.
Baqir also underlined that Covid-19 was an unprecedented catastrophe that affected the economic standing of individuals and businesses domestically and internationally.
“The proactive policy response of SBP during the peak of the pandemic, especially the refinance schemes, not only provided a breathing space to the business community but also laid sound foundations for medium to long-term industrialisation in the country.”
Traversing on another theme, Baqir said that to provide affordable housing to the masses, the SBP was working on the implementation of government of Pakistan’s “Mera Pakistan Mera Ghar” (MPMG) scheme.
This facility allows individuals, who are constructing or buying a new house for the first time, to avail bank financing at a subsidised and affordable mark-up.
“To this end, the SBP has taken various initiatives to turn the regulatory environment conducive for the growth of this sector,” he said.
A complaint resolution mechanism has also been available through the online complaint management system for MPMG since January 2021.
Baqir encouraged all MCCI members, entrepreneurs as well as SMEs to take maximum benefit from the scheme in a bid to establish or upgrade their business facilities.
He assured the business community that the SBP would offer consistent support and facilitation to them and urged businessmen to keep playing their effective role in the overall economic growth of the country.
He held the opinion that the chamber could play an active role in creating awareness of MPMG among its members. The chamber president pledged his commitment in this regard.
SAAF details
Giving details of the SAAF scheme, Baqir said that it bridged a major gap by providing an avenue to SMEs to secure collateral-free financing from banks aimed at enhancing their financial inclusion.
“Under the scheme, SMEs can avail collateral-free financing of up to Rs10 million at the concessionary end-user rate of a maximum 9% per annum to meet their long-term capital expenditure and short-term working capital needs,” he said.
“The scheme also offers a reasonable spread to banks in a bid to enable them to invest in their processes, systems, human resources and technology.”
He was of the view that when the SAAF scheme concluded, banks would be able to continue collateral-free financing on a sustainable basis.
“SAAF is a unique facility under which financing is provided by SBP while risk coverage of up to 60% is extended by the government of Pakistan,” he said.
The SAAF scheme was launched by the SBP on August 16, 2021 and eight banks were selected after a transparent bidding process.
Published in The Express Tribune, December 22nd, 2021.
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