KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has denounced high mark-up rate on financing to Small and Medium Enterprises (SMEs) under a scheme announced by the State Bank of Pakistan (SBP).
In a statement on Monday, FPCCI President Mian Nasser Hyatt Maggo expressed shock over the interest rate of up to 9 per cent under SBP’ SME Asaan Finance Scheme (SAAF).
The SMEs were appreciative of the announcement of collateral-free SAAF Scheme; but, the interest rate of 9 per cent makes it unaffordable, unproductive and unsupportive for SMEs, he added.
Maggo said that it is a welcome step that SBP has selected eight banks to get financing under SAAF Scheme from SBP; however, it makes no economic and commercial sense to allow these eight banks to charge up to 8 per cent in addition to 1 per cent of SBP’s lending fee to banks.
The FPCCI chief demanded that SAAF scheme should not have a total interest rate over 3 per cent, which will make it at par with TERF to make it affordable for SMEs, i.e. 1 per cent for SBP financing and 2 per cent for banks’ margin.
He said that in the post-pandemic scenario, nowhere in the world SMEs can afford to get capital at 9 per cent and pay it back without getting bankrupted. Maggo also noted, with concern, that SBP itself sets maximum interest rate under TERF Scheme at 3 per cent for larger enterprises and business groups; and, for SMEs, it has taken a discriminatory and unsupportive stance.
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 per cent will make the SAAF Scheme unaffordable for them.
Vohra added that his committee had a detailed meeting with the SBP officials in the 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.
Maggo said that he disagrees with the assertion by SBP that all stakeholders have been taken onboard 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.