August 19, 2024 (MLN): The State Bank of Pakistan (SBP), in order to facilitate small and medium-sized enterprise (SME) sector's access to finance, has increased the clean lending limit by 100% to Rs10 million.
Accordingly, the SBP has made amendments in the Regulation SME R-4 of Prudential Regulations for SME Financing.
As per amendment in the SME R-4 titled “Limit on Clean Facility”, banks & DFIs can take clean exposure (facilities extended based on cashflows of an SME secured solely against personal guarantees) of up to Rs10m on an SME borrower.
It may be noted that the clean exposure limit shall not include the clean consumer financing limits (Credit Card and Personal Loans etc.) allowed to a sponsor of the said SME under Prudential Regulations for Consumer Financing”.
The central bank has advised banks and DFIs to ensure circulation of above amendment among all their offices/ branches for meticulous compliance in letter and spirit.
Non-compliance of Prudential Regulations will lead to punitive action under the relevant provisions of BCO, 1962, the SBP said.
