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SAAF to be a game changer: Reza Baqir

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December 22, 2021: SBP Aasan Finance Scheme (SAAF) will be a game-changer in enhancing access to finance to SMEs as it addresses the long outstanding challenge of lack of collateral faced by SMEs, Governor State Bank of Pakistan (SBP) Dr. Reza Baqir said during his visit of Multan Chamber of Commerce and Industry (MCCI) on Tuesday.

Governor Dr Baqir highlighted that with the objective of stimulating sustainable economic growth of the country, State Bank has been taking various initiatives to facilitate the business community. Some of the major initiatives include the introduction of a unique collateral-free loan scheme for SMEs; SME Asaan Finance (SAAF), SBP’s concessionary refinance schemes for different sectors, measures taken to combat the COVID-19 effects, digitization of banking systems, and persuasion of banks to enhance financing to the business community, especially priority sectors.

During his meeting with the business community, Governor Dr. Reza Baqir discussed that the COVID-19 pandemic was an unprecedented catastrophe that affected the economic life of individuals and businesses nationally and internationally.

He highlighted that the proactive policy response by SBP during COVID times especially refinance schemes i.e. TERF and Rozgar not only provided a breathing space to employees of the business community but also laid down sound foundations for medium to long term industrialization in the country.

Traversing on another theme, Governor SBP said that to provide affordable housing to the masses, SBP is working rigorously on the implementation of the Government of Pakistan’s Mera Pakistan Mera Ghar (MPMG) scheme. This facility allows individuals, who are constructing or buying a new house for the first time, to avail bank financing at subsidized and affordable mark-up rates.

To this end, SBP has taken various measures to make the regulatory environment more conducive for the growth of this sector. A complaint resolution mechanism is also available through an online complaint management system for MPMG since January 2021. He suggested that Multan Chamber can play an active role in creating awareness among employees of its members to avail financing under MPMG. Chamber’s President pledged his commitment in this regard.   

Governor at the end assured the continued support and facilitation of the central bank for the business community and also advocated them to continue playing their effective role in the overall economic growth of the country.

From the outset, he thanked the President MCCI Khawaja Muhammad Hussain for inviting him to visit and spoke at length about the significance of SMEs in Pakistan against what they are getting in terms of access to finance, some of the initiatives SBP took to promote SME finance and potential role of SAAF in near future.  At the Chamber, he met a business community of the region and listened to their views directly.

 

During the visit of Multan Chamber of Commerce and Industry (MCCI), Governor State Bank of Pakistan, Dr. Reza Baqir, witnessed a check distribution ceremony held to mark the disbursement of the first set of loans by Meezan Bank under SME Asaan Finance (SAAF) scheme, said a press release issued on Tuesday.

Addressing the audience, the Governor underscored the importance of the SME sector for the economy and highlighted the measures taken by the State Bank of Pakistan for i) providing enabling regulatory framework for SME financing, ii) developing market infrastructure, and iii) creating awareness and enhancing the capacity of bankers and SMEs. He encouraged all MCCI members, entrepreneurs as well as SMEs to avail maximum benefit from the scheme to set up and upgrade their business facilities.

Bridging a major gap, SAAF provides an avenue for SMEs to secure collateral-free financing from banks, thereby increasing their financial inclusion. Under the scheme, SMEs can avail collateral-free financing of up to Rs 10 million at the concessionary end-user rate of up to 9% p.a. to meet their long-term capital expenditure and short-term working capital needs.

The scheme also offers reasonable spread to banks to enable them to invest in their processes, systems, human resource, and technology; so that when the SAAF scheme concludes, banks are able to continue the collateral-free financing on a sustainable basis. SAAF is a unique facility, wherein, refinance is provided by SBP while risk coverage of up to 60 percent is provided by the Government of Pakistan.

The SAAF scheme was launched by SBP on August 16, 2021, and eight banks were selected after a transparent bidding process. Besides Meezan Bank, the seven other banks including Habib Bank Ltd, United Bank Ltd, The Bank of Punjab, Bank Alfalah Ltd, JS Bank Ltd, The Bank of Khyber and Allied Bank Ltd will start disbursement under SAAF from early next month.

The desirous SME borrowers can approach any of the eight banks for availing of collateral-free financing under SAAF. The details of the SAAF scheme are available at SBP website https://www.sbp.org.pk/smefd/circulars/2021/C9.html

Press Release

Posted on: 2021-12-22T09:35:47+05:00

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