SBP for focusing on SME banking

Governor says SME contributions immense, yet overlooked.

KARACHI: State Bank of Pakistan (SBP) Governor Yaseen Anwar has stressed on Monday that banks give top priority to small and medium enterprise (SME) banking and ensure the uninterrupted flow of finances to the SME sector in the country. He was speaking at the signing ceremony of a project document for SBP and Bank Alfalah’s Financial Inclusion Program – funded by the Department for International Development – at State Bank offices in Karachi.

He said that the role of banks, especially of mid-tier banks, is crucial to ensure unhindered flow of financial resources to the SME sector. He said that the sector is an engine of economic growth for Pakistan, and that although many banks are trying to improve their market position in order to serve the sector more effectively, the current level of SME finance – as well as overall level of SMEs’ access to banking services – remains unsatisfactory and calls for more serious efforts on part of banks.

Anwar informed the gathering that the SME sector plays an important role in employment generation, poverty alleviation, and equitable distribution of resources. “The SME sector represents over 90% of all enterprises, employs 75% of the non-agricultural workforce and contributes 30% to national GDP,” he claimed. “Despite its significant contributions, it is severely constrained in access to financial resources crucial for its growth,” Anwar complained.

He advised banks to study international examples of successful SME banking models, including the retail-based model for Mass SME; relationship-based banking; advisory-based lending services; the segment-based model; and the supply-chain linked model.

Published in The Express Tribune, June 12^th, 2012.