KARACHI, October 9 2024: The State Bank of Pakistan has extended the financing limit for Small and Medium Enterprises for up to Rs. 500 million from a single bank/ DFI or all banks & DFIs. However, banks & DFIs are allowed to deduct the liquid assets (encashment value of bank deposits, certificates of deposit/ investment, Pakistan Investment Bonds, Treasury Bills and National Saving Scheme Securities) held under their perfected lien for calculation of per party exposure limit.
According to a circular issued, Small Enterprises can avail exposure of up to Rs 100 million and Medium Enterprises can avail financing (including leased assets) of up to Rs 500 million from a single bank/ DFI or all banks & DFIs.
Representing SMEs, the President Federal B Area Association of Trade and Industry (FBATI) Sheikh Muhammad Tehseen said the government through the banking regulator should introduce a long-term financing scheme at low-mark up rates besides enhancing the financing limit for SMEs to revive the sustainable production of the sector currently facing tough challenges at large for running operations due to high cost of doing business.
He said the SMEs with sustainable growth and expansion are limited, however, a low-cost financing scheme will not only give impetus to their business but it will also contribute to enhancing the exports of the country.
Tahseen pointed out that banks are currently facing liquidity issues due to low ADR ratios that could be resolved significantly through a dedicated scheme for the revival and expansion of SMEs countrywide. As soon as the output of SMEs increases, it will impact positively on exports and employment generation, he added.
The newly-elected President FBATI mentioned that SMEs need to improve their cash flows, build their infrastructure and clean energy system, procurement of machinery, and purchase raw materials.
He further said that the present government is working on the development of SMEs after realizing the sector potential of $40-60 billion in exports in the next 3 to 5 years, which is very much viable, however, a comprehensive export-oriented plan is required to design in collaboration with industries and their leadership.
