KARACHI: Deputy Governor, State Bank of Pakistan (SBP), Saleem Ullah has said that ease in access to finance for the SME sector is the priority area for the government and all banks need to create the requisite infrastructure and systems to extending digital financing solutions for supply chains of SMEs.
Speaking as chief guest at the 5th DigiBap Summit 2024 held on Monday in Karachi, he lamented that currently less than 5 percent commercial funding is extended to the crucial SME sector.
The summit was organised and hosted by Terrabiz in collaboration with Dukan.
Agriculture and SME finance expansion: SBP issues letters to banks to develop five-year plans
Top representatives from the banking and fintech sectors along with state regulators gathered to discuss ways and suggest implementable solutions to digital based financing for supply chains for small and medium enterprises and the agriculture sectors at the summit.
Slaeem Ullah mentioned that SBP’s 5-year strategic plan calls for doubling the size of credit to SMEs to Rs 1.100 trillion and increasing the borrowers 150,000 small businesses. “For this we need to accept SMEs as a profitable business segment”, he added.
Deputy Governor SBP said that SME along with agriculture and IT remain priority sectors and the Pakistan Banks’ Association (PBA) has made task forces on this to support these sectors. Banks need to properly leverage technology to meet targets, reduce bank costs, and increase access, he added.
SBP has already extended a challenge fund to start-ups for SME and DSC financing and good options had emerged, he said and added that now there is need to improve on synergies to reduce cash circulation, digital payments, digital banking and the overall digital banking eco-system. Raast with 37 million digital accounts and Rs. 15 trillion in transactions has been a game changer in digital banking, he informed.
Chairman PBA Zafar Masud said that increasing digital adoption is dismantling barriers to financial inclusion in Pakistan, engaging people in the formal financial system, aiding in the drive of economic growth, and posing an opportunity for Digital Supply Chain Finance (or DSCF) to streamline and enhance financial transactions within supply chains and offer substantial benefits to SMEs.
He mentioned that the banking regulator mandated banks to develop and implement DSCF solutions within six months to address the need to increase SMEs’ access to finance and digitize payments. In this regard, partnerships between banks, fintechs, and other technology providers can expedite the rollout of digital SCF offerings, making them accessible to SMEs relatively quickly.
Finance Minister Muhammad Aurangzeb has also mandated the PBA to work with SBP on enhancing financial inclusion in agriculture and SMEs, particularly in the area of technology and leveraging existing digital platforms, he added.
Aamir Aftab, Chief Product Officer at JazzCash, said that Pakistan is home to approximately 3 million SMEs and JazzCash aims to digitize its transactions.
Copyright Business Recorder, 2024
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