ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet was informed that the proposed SME policy will ensure full implementation of the Enhanced National Financial Inclusion Strategy (NFIS) 2023.
Sources said that the meeting of the ECC presided over by Minister for Economic Affairs Division Omar Ayub Khan during discussion on the SME policy was informed that it envisages host of measures to enhance financial access to the SMEs, and SME Asaan Finance Scheme (SAAF) for collateral-free lending launched by the State Bank Pakistan will be targeted towards SMEs, based upon size, sector, geography, and gender.
Additionally, specialised financing schemes for the SMEs that can offer or possess collateral will be developed (enhancing borrowing limits; increased risk sharing, etc), as well as, financing incentives for SMEs with tax history will be designed and launched and specialised financing schemes for micro and small enterprises will be developed to increase coverage and depth for enhanced access to finance using Micro Finance Financial Institutions.
The meeting was further told that the proposed SME policy envisages specialised programme financing for the IT and ITES sectors, including venture capital will be developed and will ensure full implementation of the Enhanced National Financial Inclusion Strategy (NFIS) 2023.
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Quarterly progress on credit disbursement to SMEs as per their size, geographical distribution, gender, sector, and other factors, as per requirement, will be provided to the SMEDA and the same will be published in the State Bank’s Quarterly SME finance review publication.
The State Bank will review key regulations relating to SME financing on a periodic basis and implement changes to smoothen process and reduce the cost of accessing and providing capital besides, it will widely disseminate information about the “movable assets registry” to ensure its uptake by commercial lending institutions.
Additionally, the SBP will put in place a system to periodically review the process of account opening, and documentation required by commercial banks, to ensure that it remains streamlined and any steps or documents that are not necessary, may be eliminated.
The meeting was told that awareness and information provision programmes with commercial banks and the SMEDA will be launched to encourage small businesses to open bank accounts. The streamlined process will also be advertised and publicises through commercial banks and media.
To ensure better awareness on all aspects, the SMEDA will work with National Institute of Banking and Finance (NIBAF) for training of banks and SMEs to address the informational gaps between the two.
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The SBP will facilitate commercial banks to open back to back letter of credit, so that the exporting firms are able to use their receivables as collateral to secure short-term financing.
The State Bank will use moral persuasion with commercial banks to enhance SME financing and targets will be assigned to financial institutions for SEs and MEs.
These targets will be reviewed periodically and banks will be encouraged to increase the coverage across different sized SMEs, the Pakistan credit Guarantee Company will be operationalised as per agreement between the Ministry of Finance and the SBP, and Central Bank will consider the viability of incentivising banks by offering different risk coverage levels based on their performance.
Copyright Business Recorder, 2021
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