Prime Minister Imran Khan has met our outstanding demand by introducing a financing scheme for Small and Medium Enterprises (SMEs), enabling them to get loans without security and collateral and we are grateful to premier for easing "doing business" for SMEs and ending joblessness
Exchanging views with senior journalists here today noted Industrialists, Former President of Multan Chamber of Commerce & Industry,Sitting President of DGCCI, Ex-Punjab caretaker Minister rfor Industries,Chairman of PESSI Health management committee,member of board of director of BOI & high level agriculture Committee, Member Board of Governors of Pak aab Authority and a member of the syndicate of Nishtar Medical University Khawaja Jalaluddin Roomi said that he had suggested to Prime Minister, Federal Finance Minister and Governor State Bank during his meeting to introduce a financing scheme for Small and Medium Enterprises (SMEs), enabling them to get loans without security and collateral.
Romi said that he would call on Prime Minister Imran Akhan and Federal Finance Minister Shaukat Tarin and he would convince them to allocate at least 30 % quota of this scheme for south Punjab so that it could run the wheel of economy swiftly.
He assured that a help and awareness desk would be established at Multan and Dera Ghazi Khan chamber for guidance of youths and SMEs
He said the scheme would improve the SMEs’ access to finances in collaboration with the government aimed at enabling the businesses that cannot offer security or collateral to access bank finance and Govt would provide risk coverage of 40-60pc to selected banks against losses
“This initiative has been brand named, ‘SME Asaan Finance’ or SAAF to emphasise the SME facilitation feature of this scheme to provide clean lending i.e. lending without collateral to SMEs,” he said . Roomi said that this scheme would help in alleviating the pressure of unemplopyment in the country.
Under the scheme, the SBP will provide refinance for three years to the selected banks. After three years, the refinance will be repaid by banks in 10 equal yearly instalments.
“Selected banks will get refinance from the SBP at 1 percent per annum and extend financing to SMEs at end user rate of up to 9pc p.a. which is very attractive compared to informal finance costs,” Roomi said.
Under SAAF, all SMEs that are new borrowers of a bank will be eligible to avail financing of up to Rs10 million. The collateral-free (clean) financing will be available to SMEs for long-term fixed capital investment and working capital finance requirements.
Jalaluddin Roomi further said that Shariah-compliant Islamic as well as conventional modes of finance will be offered. The scheme will be available to SME borrowers towards the end of September 2021.An attractive feature of the scheme is that the government will provide risk coverage of 40 to 60pc to the selected banks against losses depending on the size of loans.
This risk cover will be 60pc for small loans up to Rs4 million; 50pc for midsize loans from above Rs4m to Rs7m and 40pc for relatively large loans of Rs7m to Rs10m,he added.
Roomi said that State bank will provide refinance to banks while the government will support via partial credit guarantees to the participating banks. This support is being provided initially for three years to facilitate investments by banks in technology, infrastructure and team building specialised in SME lending, after which SME financing by banks is expected to be sustainable without the SBP or government support.
Speaking about the collateral-free lending scheme, Khawaja Jala;uddin Roomi welcomes and supports this innovative initiative of the State Bank, which would enable SMEs without collateral to access bank finance. We look forward to seeing strong participation from commercial banks to take this initiative forward”.
He said that the SME sector plays a pivotal role in Pakistan’s economy and is estimated to contribute 40pc to GDP and 25pc in export earnings.
