FPCCI dissatisfied with SMEs financing scheme

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed dissatisfaction over the exorbitant interest rate of up to 9 per cent allowed to commercial banks under the State Bank of Pakistan’s (SBP) SME Asaan Finance Scheme, a statement said on Saturday.

FPCCI president Mian Nasser Hyatt Maggo said that the central bank will provide refinancing to the commercial banks at 1 per cent and they will be allowed to charge up to 8 per cent on top of that, i.e., up to 9 per cent, in total.

The FPCCI chief demanded that the scheme should not have a total interest rate of over 3 per cent to make it at par with the Temporary Economic Refinance Facility (TERF) to ensure affordability for the SMEs.

Maggo said that the SBP’s total refinance limit for the programme appears to be a small and insignificant amount of Rs1.19 billion as per the budget documents for the year 2021/22; under the head of Refinance and Credit Guarantee Scheme for collateral-free lending to the SMEs.

He termed the miniscule amount for the scheme for the year 2021/22 a joke with the SMEs and expressed the shock over the fact that the TERF scheme has a total outlay of Rs560 billion and has mainly gone to large and established businesses, while the central bank continued to neglect the SMEs.

The FPCCI chief demanded that Pakistan needs an effective, inclusive, wide-ranging and collateral-free SMEs finance scheme backed by the State Bank of Pakistan and, in principle, it should be as big as TERF and should run into billions of rupees.

Maggo said that another glaring flaw in the scheme is that the commercial banks will have the total discretion in approval of the financing under SAAF; which, in turn, will cause delays and disapprovals.

The SBP should devise a transparent and definitive mechanism for the effective implementation and enforcement of the SAAF scheme, he said.

The FPCCI is eagerly looking forward to have a detailed and tangible consultative process with the SBP officials to work out a progressive and growth-oriented finance package for the SMEs of Pakistan, the real engine of economic growth and employment generation in Pakistan.

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