SMEs’ growth: PBA hails SBP’s initiative of risk coverage scheme for banks
KARACHI: In a collaborative effort to support the SME sector, the State Bank of Pakistan (SBP) has recently increased the clean lending limit for SMEs to Rs 10 million, following recommendations from the Pakistan Banks’ Association (PBA).
This strategic move aligns with the government’s objectives to boost SME growth and is part of the PBA’s priority sector initiatives aimed at enhancing financial access for SMEs, which are crucial for economic expansion and job creation in Pakistan.
Additionally, reflecting its shared commitment to strengthening the banking sector, the SBP has also introduced a risk coverage scheme, which will help the banking sector to double its SME exposure to Rs 1.1 trillion during the next five years.
PBA, under its priority sector initiatives, has been actively working with the SBP to develop and promote financial products that cater specifically to the needs of the SMEs. The issuance of the risk coverage scheme and increased clean lending limit will provide much-needed financial flexibility to SMEs, enabling them to expand their operations, invest in innovation, and contribute more effectively to the national economy.
Furthermore, the enhanced lending limit is expected to stimulate greater financial inclusion and encourage banks to extend more credit to the SME sector. This move is anticipated to have a far-reaching impact, particularly in fostering entrepreneurship and supporting small businesses that form the backbone of Pakistan’s economy.
Speaking on the recent developments, Zafar Masud, Chairman – PBA stated, “The introduction of the risk coverage scheme for banks and increased clean lending limit to Rs. 10 million is a game-changer for SMEs in Pakistan. It reflects the Central Bank’s commitment to supporting the sector and aligns perfectly with PBA’s Priority Sector Initiatives aimed at boosting SME financing. We are confident that this measure will lead to a substantial increase in SME lending, which is essential for economic growth and job creation.”
Copyright Business Recorder, 2024
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