LAHORE: Consistent depreciation in value of rupees against dollar is not because of the IMF but it is driven by market sentiment and rupees will get stable soon.
State Bank of Pakistan (SBP) Governor Yaseen Anwar claimed this while delivering a speech on ‘Strengthening Institutional Ties for Increasing SME’s Access to Finance’ at the 7th Pakistan SME Conference 2013.
He said that the SMEs had potential to serve as a growth engine of economy by providing economic linkages/services to the corporate sector, generating employment and alleviating poverty.
The SBP governor stated that the SME sector were contributing 30 per cent towards the country’s GDP, employing more than 78 per cent of the non-agricultural workforce, accounting for 35 per cent of the value added in the manufacturing industry, and generating 25 per cent in export earnings. However, despite its strong potential, the SME sector was vulnerable to economic shocks and was perceived as a highly risky sector by the banks while taking exposure on it.
Banks lending to SMEs had been showing a declining trend over the past few years,” the governor said, adding that the key reason for the low level of exposure in the SME sector was the banks’ reticence about the market segment.
Yaseen Anwar said that the SMEs had limited awareness of different financing options and did not have expertise/capability to present their project proposals and borrowing requirements to the banks.
“I would strongly urge all the institutions responsible for SME sector uplift to strengthen their ties and work together for achieving the objective of SMEs enhanced access to formal credit. These institutions should exchange relevant information on demand/supply side aspects of SMEs, take measures for capacity building of SMEs,” he urged.
He said that ‘financial inclusion’ was an integral part of the SBP’s financial sector development strategy, and SME Finance was one of the key components of financial inclusion.
He said that SBP had established the SME Consultative Group to serve as a common platform of members from related organisations like SBP, PBA (Banking Industry), SMEDA, BSF, SME Association and International Donor Agencies.
The governor said that the SBP was also running a medium to long term financing facility for the modernisation of existing units and setting up of new SME mills/units to produce quality products and the rates charged to borrowers were 8%, 9% and 10% for tenors of 3, 5 and 10 years respectively.
Small & Medium Enterprises Development Authority General Manager Sultan Tiwana, Bank Alfalah’s Javaid Iqbal, Project Manager, Business Edge, IFC-World Bank Group, SBP Director SME Syed Samar Hasnain, SBP Director Development Finance Support Department Mazharul Haq, SMEDA CEO Sardar Ahmad Sukhera, Lahore Chamber of Commerce and Industry President Farooq Iftikhar and other also spoke on the occasion.