LAHORE: Pakistan Businesses Forum (PBF) has said that small and medium enterprises (SMEs) have proved to be the engine of successful economy. In Japan, South Korea, Taiwan and India this sector is fully supported by financial institutions but in Pakistan 'this sector is largely ignored even in ongoing pandemic.
PBF President Sahibzada Mian Usman Zulfiqar said SMEs are important as they are an efficient vehicle for transferring the fruits of growth to different economic sectors.
They also provide export goods and at times provide valuable inputs to large exporting organizations.
Despite these facts, over the past 70 years, this economic segment has been largely ignored by the policy-makers.
According to a recent study SMEs holds a minimal share of the banking credit portfolio while the major chunk goes to corporate sector.
Usman further said "availability of banking credit serves as a blood line for any business and credit flow in Pakistan is biased in favour of large corporate firms"
Due to this disparity, the gap between the rich and the poor has widened beyond imagination and Small firms have vanished.
In this regard the recent State Bank of Pakistan's (SBP) Refinance Scheme for Small Businesses in the light of COVID-19 has so far failed to take off as the commercial banks are not designed and fully equipped to provide credit line to Small and Medium Enterprises (SMEs).
One of the major reasons SBP's Refinance Scheme for Small Businesses is failing to take off because our banks and their staff have never focused on credit support for SMEs. The banks are still reluctant to go ahead at the desired pace despite the fact that the Ministry of Finance placed cost sharing mechanism with the SBP for providing Rs30 billion subsidy to banks for absorbing the first 40 percent default cases out of this scheme to protect jobs after the COVID-19 pandemic.
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