SBP-mandated 9% Interest Rate for SMEs is Unacceptable: President FPCCI

November 8, 2021: Mian Nasser Hyatt Maggo, President FPCCI, has expressed his shock over the interest rate of up to 9% under the State Bank of Pakistan (SBP)’ SME Asaan Finance Scheme (SAAF).

The SMEs were appreciative of the announcement of collateral-free SAAF Scheme; but, the interest rate of 9% makes it unaffordable, unproductive, and unsupportive for SMEs, he added.

Mian Nasser Hyatt Maggo said that it is a welcome step that SBP has selected 8 banks to get financing under SAAF Scheme from SBP; however, it makes no economic and commercial sense to allow these 8 banks to charge up to 8% in addition to 1% of SBP’s lending fee to banks.

Mian Nasser Hyatt Maggo has demanded that the SAAF scheme should not have a total interest rate over 3.0% which will make it at par with TERF to make it affordable for SMEs, i.e. 1% for SBP financing and 2% for banks’ margin.

FPCCI Chief said that in the post-pandemic scenario, nowhere in the world SMEs can afford to get capital at 9% and pay it back without getting bankrupt. He also noted, with concern, that SBP itself sets maximum interest rate under TERF Scheme at 3% for larger enterprises and business groups; and, for SMEs, it has taken a discriminatory and unsupportive stance.

Mr. Iftikhar Ghani Vohra, Convener of FPCCI’s Central Standing on SMEs, said that based on the feedback from across Pakistan, he can say that SMEs are not happy with the exorbitant interest rate; as 9% will make the SAAF Scheme unaffordable for them.

Mr. Iftikhat Ghani Vohra added that his committee had a detailed meeting with the SBP officials in mid-September; and, they categorically conveyed their concerns to the officials. However, FPCCI’s concerns have fallen on deaf ears and no change in interest rate has been announced.

Mian Nasser Hyatt Maggo said that he disagrees with the assertion by SBP that all stakeholders have been taken on board on SAAF Scheme; as FPPCI’s proposal has not been taken into account. It is pertinent to note that FPCCI is the apex representative body of all the SMEs, chambers & associations of Pakistan and; therefore, the biggest stakeholder in the policies affecting SMEs, he added.

Press Release