Financing without guarantee, a game changer for SMEs: SBP governor

KARACHI: State Bank of Pakistan (SBP) Governor Dr Reza Baqir said on Tuesday that the Aasan Finance Program (SAAF) would be a game-changer by improving access to finance for small and medium enterprises as ‘it takes up the long-standing challenge of the lack of guarantees that these companies face.

The SBP governor visited the Multan Chamber of Commerce and Industry (MCCI) where he met the business community in the region and listened directly to their views, according to a statement.

He said that in order to boost the sustainable economic growth of the country, the SBP has taken various initiatives to facilitate business. Some of the main initiatives include the introduction of a unique program of unsecured loans for SMEs; SAAF, SBP’s concessional refinancing programs for different sectors, measures taken to combat the effects of Covid-19, digitization of banking systems and persuasion of banks to improve financing for companies, in particular priority sectors.

During his meeting with the business community, Baqir said that SBP’s proactive policy response during the Covid era, in particular the refinancing programs, namely the Temporary Economic Refinancing Mechanism and Rozgar, not only offered a respite for employees from the business world, but also laid a solid foundation for mid-size companies. to the long-term industrialization of the country.

He also attended a check distribution ceremony held to mark the disbursement of the first round of Meezan Bank loans under SAAF. The governor underlined the importance of the SME sector for the economy and highlighted the measures taken by the SBP to provide a regulatory framework conducive to the financing of SMEs, develop market infrastructure and raise awareness and strengthen the capacities of bankers and financial institutions. SMEs.

He encouraged all MCCI members, entrepreneurs as well as SMEs to make the most of the program to set up and modernize their business facilities.

Filling a major gap, SAAF provides a means for SMEs to obtain unsecured financing from banks, thereby increasing their financial inclusion. Under this program, SMEs can benefit from unsecured financing of up to Rs 10 million at the end user preferential rate of up to 9% per annum to cover their capital expenditure. long-term and their short-term working capital needs. The program also provides a reasonable margin for banks to allow them to invest in their processes, systems, human resources and technologies; so that when the SAAF scheme ends, banks are able to continue unsecured funding on a sustainable basis. SAAF is a single facility, in which refinancing is provided by SBP, while risk coverage up to 60 percent is provided by the Government of Pakistan.

The SAAF program was launched by SBP on August 16, 2021 and eight banks were selected after a transparent bidding process. In addition to Meezan Bank, the other seven banks, including Habib Bank Ltd, United Bank Ltd, Bank of Punjab, Bank Alfalah Ltd, JS Bank Ltd, Bank of Khyber and Allied Bank Ltd, will start disbursements under the SAAF from beginning of next month.

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