Collateral free loans to businesses soon, said governor SBP

by Admin

Lahore: The Governor State Bank of Pakistan Dr Reza Baqir has said that the SBP is going to initiate a scheme for Financing to Cottage Industry up to Rs10 million without the collateral.

He said that the government will give guarantee to the banks against losses and will invite Expression of Interest from banks for inclusion in this scheme. The Governor SBP said that the end user rate for the small businesses and cottage industry in this scheme would be 9% which otherwise get loans at 24%.

While talking with executives of Lahore Chamber of Commerce and Industries, the governor SBP said that to facilitate the growth of IT sector, particularly the startups, foreign exchange laws have been relaxed and made more business friendly. The foreign funding in IT sector will be greatly facilitated by relaxation in laws. Banks have been fully delegated to handle the payment issues of IT companies. He said that the IT companies can now get web and digital services from abroad for up to $200,000 without the approval of State Bank. Previously this limit was $10,000.

Baqir said that SBP has initiated various schemes like Principal Restructuring, TERF and Refinance scheme for payment of salaries to support the businesses during adverse COVID times. He said that more than 90% beneficiaries of the scheme for restructuring of Principal amount were the small borrowers. More than Rs600 billion loans were restructured.

“In total, the State Bank provided a relief of more than Rs2 trillion to the business community through various schemes to help the economy to get on track”, Baqir said adding that the government deserves appreciation for its various initiatives during covid times. Due to the prudent policies of the government, the debt to GDP ratio did not increase during the covid period while the in the developed economies, it increased by 10% to 15%.

He said that as far as the TERF scheme is concerned, Rs436 billion financing has been approved out of which $500 million have already been disbursed while the disbursement of remaining amount is in pipeline. Once the full amount is disbursed, then we can think of further extending this scheme. We also have to keep the import payments in check as this scheme is mainly for importing machinery.

LCCI President Mian Tariq Misbah said that the Temporary Economic Refinance Facility (TEFR) which was initiated by the State Bank for provision of long term finance facility at concessionary rates for purchase of new imported/locally manufactured plant and machinery for setting up new projects should extend further as it expired on 31st March 2021.

He said that the State Bank Refinance Scheme for the payment of Salaries which expired on September 30 2020 should be initiated again, particularly for the hospitality sector e.g. Restaurants, Marriage Halls which have suffered the most during to the lockdown.

The LCCI President said that the State Bank should organize orientation sessions in all the Chambers of Commerce to apprise the business community about the functioning Pakistan Single Window System before it is formally launched in August 2021. He said that the members of Business community, especially belonging to Rice milling business are unable to export Rice to Iran due to sanctions and payment issues. In this regard, the State Bank should work on a mechanism of exporting rice to Iran through Barter Trade mechanism.

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