Loans for SMEs: SBP decision to review regulations greeted
KARACHI: Malik Khuda Bakhsh, Chairman of the Energy Standing Committee of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and President of the Pakistan Business Forum (Karachi Region), has welcomed the State Bank of Pakistan's decision to review the regulations for easy funding for small and medium-sized enterprises (SMEs).
He stated that this decision will promote sustainable, responsible, and inclusive access to finance for the SME sector. He said that it is too easy to attribute SMEs' resistance to joining the documented economy simply to their reluctance to be part of the tax net. In reality, what is needed is a program that improves and simplifies the regulatory process while focusing on reducing bureaucratic barriers.
According to the State Bank of Pakistan, the amendments in the regulations aim at to define a procedure that will help these institutions avoid difficulties in obtaining loans from banks while also providing facilities for loan repayment.
Malik Khuda Bakhsh further stated that, despite their immense role in national development, small and medium-sized enterprises (SMEs) have long been neglected. Nearly 80% of jobs in the non-agricultural sector are provided by SMEs, which contribute to 40% of Pakistan's GDP. However, only 6% of loans from private banks are given to this sector, reflecting that despite the vital role these enterprises play, they are not being given the importance they deserve.
He went on to say that it is estimated that around 5 million SMEs are operating in Pakistan. This sector plays a key role in the country's development and is not only creating new jobs but also contributing to the growth of national exports.
Malik Khuda Bakhsh highlighted that SMEs also play a significant role in Pakistan's external sector, contributing around 25% of total exports. The government has set a target of increasing exports to $60 billion over the next five years, and much of this depends on the potential and growth of SMEs.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
6 hours ago
- Business Recorder
SBP injects record high Rs14.3trn in banks for seven days
The State Bank of Pakistan (SBP) has injected a record high Rs14.3 trillion in conventional commercial and Shariah-compliant banks for one week to help overcome the shortage of liquidity in the system after people withdrew significant cash during Eid-ul-Adha and external inflows delayed, it was learnt on Friday. The volume of the injection through open market operations (OMO) comes to almost 44% of the total deposits standing at Rs32.7 trillion in May 2025, according to the central bank latest data. SBP injects massive Rs11.85 trillion into banking system for up to 14 days Citing SBP Governor Jameel Ahmad from an analysts briefing held after the issuance of the latest monetary policy at the outset this week, Arif Habib Limited (AHL) and Topline Research said the OMO stock had increased mainly due to two reasons, including higher currency in circulation during Eid (temporary effect) and delays in external inflows. 'However, OMO levels are expected to decline in the coming weeks as (external) inflows materialise,' AHL reported Ahmad saying this. AHL's Sana Tawfiq and AKD Securities' Awais Ashraf said the cumulative supply of over Rs14 trillion to banks through OMO were record high injections. Elaborating SBP Governor Ahmad's reasoning for the elevated OMO stocks, Tawfiq said people withdrew huge cash from banks during Eid that reduced deposits levels and created additional demand for liquidity in the system. Besides, the reliance of the government on domestic debt has spiked after external inflows from multilateral creditors like the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB) got delayed. She added the government reliance on domestic debt, including the one from commercial banks, had been on the rise, as the collection of revenue in taxes had remained low compared to government expenditure. The low tax collection was increasing fiscal deficit, which is being met through piling up debt. Ashraf said the external inflows had remained low for the past two to three years, shifting the government reliance solely on domestic debt to finance budget deficit. Pakistan salaried class rejects govt's claim of giving relief in income tax He said commercial bank financing and national saving schemes had remained two rich avenues available with the government to raise new debt. Out of total Rs31.8 trillion the domestic debt, the share of bank loans had stood at Rs28.1 trillion at present, he added. SBP OMO breakup The breakup of the data suggest the SBP injected Rs13.9 trillion into conventional commercial banks at the rate of return of 11.03% for a period of seven days, as it accepted all the 34 quotes received from banks for the loan. The central bank supplied another Rs375 billion to Shariah compliant banks at the rate of return of 11.11% for seven days, accepting all the three quotes received from Islamic banks.
Business Recorder
21 hours ago
- Business Recorder
BISP, NAVTTC ink partnership
ISLAMABAD: BISP and NAVTTC have signed a Memorandum of Understanding (MoU), a press release said on Thursday. The MoU was signed by Dr Asim Ijaz, Director General NSER BISP, and Dr Ishaq Rao, DG NAVTTC, the press release added. The objective of the MoU is to establish a collaborative partnership between BISP and NAVTTC to jointly work on the poverty graduation of BISP beneficiaries through skill development initiatives, said the press release. Copyright Business Recorder, 2025
Business Recorder
21 hours ago
- Business Recorder
Dar discusses challenges facing power sector
ISLAMABAD: Deputy Prime Minister Ishaq Dar presided over a high-level meeting to discuss challenges facing the power sector. The meeting was attended by Minister of Power, SAPM Tariq Bajwa, and other senior officials from ministries of power and finance. During the meeting, Dar underscored the urgency of addressing sustainability concerns and restoring confidence in the sector. He emphasised the importance of swift and coordinated action to resolve outstanding issues, to ensure long-term stability and economic viability. The meeting reiterated government's commitment to create an enabling environment for investment, enhance transparency, and safeguarding the interests of all stakeholders. Copyright Business Recorder, 2025
