SBP to boost payment mechanism for small, medium enterprises

Commercial banks mandated to implement digital supply chain finance solutions within six month

KARACHI:

The State Bank of Pakistan (SBP) has directed commercial banks to adopt digital supply chain finance (DSCF) solutions to support small and medium-sized enterprises (SMEs).

The central bank has mandated that commercial banks develop and implement these DSCF solutions within six months.

A DSCF is a solution that helps businesses maximise their cash flow by extending the payment terms they give to their suppliers while giving their suppliers the option to be paid early. As a result, both the buyer and the provider benefit.

This initiative aims to enhance access to finance for SMEs. Additionally, it will enable the effective use of technology for the digitisation of retail payments.

In its directive, the SBP also emphasised the establishment of an efficient supply chain finance sector.

To facilitate this, banks can either develop their own DSCF solutions or collaborate with fintech companies or service providers.

According to the SBP, the implementation of DSCF solutions will increase SMEs' access to finance, improve their operational efficiency, reduce costs, and strengthen risk management practices.

On May 24, industrialists and analysts urged the government to help enhance the growth and development of SMEs, with a particular focus on the auto parts industry, aimed at creating a more robust and dynamic economic landscape.

They called for putting a complete ban on the import of used vehicles to promote the struggling local auto industry while presenting budget proposals for fiscal year 2024-25.

Tomorrow, the federal budget, with an estimated total volume of approximately Rs18,000 billion, is to be presented for the fiscal year 2024-25 in Parliament. The budget is expected to include a 10-15% salary increase for public employees and a tax collection target of Rs12.9 trillion.