FPCCI rejects interest rate at 9% for SMEs

KARACHI: Mian Nasser Hyatt Maggo, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed shock over the interest rate of up to 9 per cent under the State Bank of Pakistan (SBP)’ SME Asaan Finance Scheme (SAAF), a statement said on Monday.

The SMEs were appreciative of the announcement of collateral-free SAAF Scheme; but, the interest rate of 9 per cent makes it unaffordable, unproductive and unsupportive for the SMEs, he added.

Maggo said that it is a welcome step that the central bank has selected eight banks to get financing under SAAF Scheme from the SBP; however, it makes no economic and commercial sense to allow these eight banks to charge up to 8 per cent in addition to one per cent of the SBP’s lending fee to banks.

The FPCCI chief demanded the SAAF Scheme should not have a total interest rate over 3 per cent, which will make it at par with TERF to make it affordable for the SMEs, i.e., one per cent for the SBP financing and 2 per cent for the banks’ margin.

In the post-pandemic scenario, nowhere in the world the SMEs can afford to get capital at 9 per cent and pay it back without getting bankrupted, he said, adding that the SBP itself sets maximum interest rate under TERF Scheme at 3 per cent for larger enterprises and business groups; and, for the SMEs, it has taken a discriminatory and unsupportive stance.

Iftikhar Ghani Vohra, convener of the FPCCI’s Central Standing Committee on SMEs, said that based on the feedback from across Pakistan, he can say that the SMEs are not happy with the exorbitant interest rate; as 9 per cent will make the SAAF Scheme unaffordable for them.

He said his committee held a detailed meeting with the SBP officials in the middle of September; and, they categorically conveyed their concerns to the officials; however, the FPCCI’s concerns have fallen on deaf ears and no change in interest rate has been announced.

Maggo said that he disagrees with the SBP assertion that all the stakeholders have been taken onboard on SAAF Scheme; as the FPPCI’s proposal has not been taken into account.

The FPCCI is the apex representative body of all the SMEs, chambers and associations of Pakistan and; therefore, the biggest stakeholder in the policies affecting the SMEs, he added.