SBP credit guarantee scheme for SMEs

[Lahore_Real_Estate]

KARACHI, March 17: SBP governor Salim Raza would launch a credit guarantee scheme for small and rural enterprises under the financial inclusion programme at a ceremony on March 19.

He will also announce a refinance scheme for small and medium enterprises in NWFP, FATA and Gilgit-Baltistan to enhance flow of credit to SME and agriculture sectors with greater emphasis on revitalisation of business activities in the troubled areas of NWFP, FATA and Gilgit-Baltistan.

The ceremony will be attended by all stakeholders, including representative from banking industry, donors and consultative groups of SMEs, agriculture and microfinance.

Agriculture and SME sectors contribute significantly to GDP and export earnings of the country and also employ a large share of labour force, thus greatly contributing to poverty reduction.

Keeping in view economic importance of these two sectors, the State Bank has initiated steps to improve flow of credit to these sectors.

The SBP had launched a large financial inclusion programme with pound 50 million grant from the UK’s Department for International Development to promote inclusive economic growth through provision of sustainable financial services to poor, small entrepreneurs, women and marginalised communities.

It had already launched the microfinance credit guarantee facility and the institutional strengthening fund (ISF). The microfinance credit guarantee facility witnessed a steady increase in interest from potential takers. So far, four microfinance providers have secured term sheets from commercial banks. These transactions will mobilise funds of Rs1.5 billion for microfinance banks and institutions.

A total of Rs300 million grants were approved by the Institutional Strengthening Fund Committee in the first phase. These include Rs82 million to National Rural Support Programme’s transformation into microfinance bank (MFB); Rs82 million to Tameer Microfinance Bank to launch its Branchless Banking through easyPaisa and Rs133 million for Pakistan Microfinance Network (PMN) for operational support.

Three new grant applications have been approved worth Rs58 million for support to First Microfinance Bank, Kashf Microfinance Bank, and Centre for Women Cooperative Development, recently.

In addition, FIP is supporting remittance and anti-money laundering and counter terrorism financing for which support is being provided to pakistan remittance initiative and financial monitoring unit. In the next phase, FIP will launch financial innovation challenge fund worth GBP 10 million and a technology fund worth GBP2 million to promote financial innovation and support alternative delivery channels.