President of the Union of Small and Medium Enterprises (UNISAME), Zulfikar Thaver, in a meeting held at the State Bank of Pakistan office on Tuesday, July 31st 2018, said that the sector needs a strong Small and Medium Enterprise Development Authority (SMEDA) as it needs to be much strengthened and increased in size and scope for the outreach of SMEs.
He thanked Syed Samar Hasnain, Executive Director, State Bank of Pakistan (SBP), and his team for the friendly policies for Small and Medium Enterprises and the strategic uplift plan for the sector under the National Financial Inclusion Strategy and also appreciated SMEDA for its efforts and achievement despite very limited resources.
The participants namely senior bankers, officials, and directors of SBP; SMEDA; and UNISAME, discussed the recommendations of the working groups of 'Policy, Product, and Services Development' chaired by Javed Iqbal of AlFalah Bank and 'SME Finance Capacity Building' by UNISAME chief.
The meeting also discussed the funding mechanism for capacity building of bankers and SMEs, the establishment of a Centre of Excellence (CoE), tax incentives for SMEs and resource requirements for other key actions.
The executive director formed groups of bank executives and SMEDA to be chaired by Nadia Jehangir, General manager SMEDA, for integrated efforts as well as to acquaint the stakeholders about the role of SMEDA.
President UNISAME urged the banks to develop special products for SMEs such as 'Pay as you earn schemes', merchant accounts for facilitating e-commerce, financing SMEs to buy commercial properties on easy repayment terms and setting up of ‘training the trainers’ centers. He also urged the SBP to enhance its risk management education for banks.
He also raised the issue of high landed cost of imported raw material due to the depreciation of the rupee and the banks demanding a 100% margin on imports. The banks are also not inclined to finance exports to third world countries. “State insurance at a low premium is required to make banks comfortable,” he pinpointed.
The executive director informed the establishment of Exim Bank and said the process is almost complete and is just a matter of time. The matter of SME Bank is also under consideration.
UNISAME also proposed to the SBP to stop further depreciation of rupee through proactive methods.
Thaver appreciated the intention of the SBP to entrust the setting up of CoE at National Institute of Banking and Finance (NIBAF) for banks and suggested that the Small and Medium Enterprises Development Authority (SMEDA) be given the task to set up CoE for SMEs separately.
The executive director welcomed the suggestion of franchise financing and advised UNISAME and Provincial Chief of SMEDA, Mukesh Kumar, to submit module for study and adoption on approval.
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