Prominent businessman and SME representative Ateeq Ur Rehman has pointed out few major hurdles being faced by the local small and medium enterprises (SMEs) which, he said, needed urgent attention of the relevant higher authorities.
He said that SMEs are still missing from banks' radar. He said that lending to SME financing for building fixed assets, financing their domestic and foreign trade, resolving their financial and working capital shortfalls is the need of the day. Total financing by a bank should be fixed at a ratio of corporate vs SME financing and the government and financial institutions should build active SME portfolios in the banking sector and capacity to finance SMEs.
He said that SME sector is the backbone of Pakistan's economy in terms of its contribution to the GDP, employment generations and export development but it is still neglected.
"With over 82 percent of the country's enterprises fall under SME category, only 7 percent of the total private sector financing is given to SME sector," he said, adding that cash flows are a problem for SMEs not only because of access to finance but because of demand of collaterals and payment of cost of funds.
Ateeq said that without any injection of capital for SMEs equity requirement leads to NPLs that should be discouraged as it leads to income reduction, increase in expenses and non-compliance to financial requirements and non-availability of running finance.
He said that SMEs should be restricted to adhere to its efforts for avoiding non-performing portfolio and utilizing the funds in quality business alongside strict control over operating expenses. He said that State Bank of Pakistan is playing an important role in identification of SMEs problems and its redressal. He said that resolving such problems would immensely help in the growth of economy of Pakistan. He thanked the Governor SBP Tariq Bajwa for his enormous support to SMEs and for his understanding the problems of the neglected SMEs of Pakistan.
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