SBP launches Islamic working capital financing for small, medium enterprises

KARACHI: State Bank of Pakistan (SBP) on Wednesday launched Islamic Working Capital Financing (IWCF) for small enterprises and low-end medium enterprises.

The central bank said that “Refinance Scheme for Working Capital financing of Small Enterprises and Low-End Medium Enterprises” was available through IH&SMEFD Circular No. 09 of 2017. However, Shariah compliant alternative of this scheme was not available.

Now, SBP is introducing a Mudarabah based “Islamic Refinance Scheme for Working Capital Financing of Small Enterprises and Low-End Medium Enterprises (IWCF)”.

SBP shall make Mudarabah investment in general pool of Participating Islamic Financial Institutions under the scheme.

Financing shall be initially available to meet the working capital requirements of SME sectors, included: Information Technology (IT); Gems and jewelry; Furniture; Leather industry; Surgical goods; Fruits, vegetables and food processing & packaging; Dates processing; Printing & packaging.

Small Enterprises (SEs) as defined in SBP’s Prudential Regulations (PRs) for SME financing are eligible under the scheme. Maximum financing limit for SEs is the same as defined in SBP’s relevant PRs.

Medium enterprises (MEs) with annual sales turnover of up to Rs 300 million are eligible under the scheme. Maximum financing limit for MEs is Rs 50 million. Maximum financing tenor under the scheme is one year.

The banks/development financial institutions (DFIs) may submit their requests for the status of Participating Islamic Financial Institution, the SBP said.

They may also apply for allocation/ assignment of limit under the scheme. These requests may be submitted within 30 days from the date of issuance of this circular, the SBP added.

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