Karachi: The State Bank of Pakistan (SBP) has introduced ‘SME Asaan Finance’ or SAAF scheme for the Small Medium Enterprises (SMEs) to get loans without collateral, a news source reported on August 16. Under the announced scheme, SMEs that were previously unable to obtain funding owing to a lack of collateral will be able to obtain a clean loan of up to PKR 10 million.
SBP indicated that these loans will be utilised to address SMEs’ long-term fixed capital investment and working capital credit needs. Shaukat Tarin, the Federal Minister of Finance and Revenue, stated that the move will usher in a new age of growth and industrialization in the country. He expressed hopes that commercial banks will also join the initiative.
‘Selected banks will get refinance from the SBP at 1 percent per annum and extend financing to SMEs at end user rate of up to 9pc p.a. which is very attractive compared to informal finance costs,” according to SBP.
After three years, the refinance will be repaid by banks in 10 equal yearly instalments.
In order to support banks, the government will also provide risk coverage of 40-60% to selected banks against losses based on the loan amount. The risk cover will be:
• 60% for small loans up to PKR 4 million
• 50% for midsize loans falling between PKR 4 million and PKR 7 million
• 40% for relatively large loans between PKR 7 million and PKR 10 million.
Nauman Ahmad is an imaginative Pisces whose love for literature and nature is unparalleled. When he's not reading or hiking, he's sleeping and eating, which gives him plenty of energy for his next adventure.
