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LAHORE: State Bank of Pakistan (SBP) Governor Dr Reza Baqir has said that the central bank is going to initiate a scheme for financing to cottage industry up to Rs10 million without any collateral.

The government will give guarantee to the banks against losses and will invite expression of interest from banks for inclusion in this scheme. The end user rate for the small businesses and cottage industry in this scheme would be 9 percent which otherwise get loans at 24 percent, the SBP Governor was talking to Lahore Chamber of Commerce and Industry (LCCI) President Mian Tariq Misbah and Vice President Tahir Manzoor Chaudhry at the State Bank of Pakistan. Deputy Governor State Bank Sima Kamil, Director Policy Exchange Department Arshad Bhatti and other senior officials of State Bank were also present on the occasion.

He said that to facilitate the growth of IT sector, particularly the start-ups, foreign exchange laws have been relaxed and made more business friendly. The foreign funding in IT sector will be greatly facilitated by relaxation in laws. Banks have been fully delegated to handle the payment issues of IT companies. He said that the IT companies can now get web and digital services from abroad for up to US$200,000 without the approval of State Bank. Previously this limit was US$10,000.

The Governor said that SBP has initiated various schemes like principal restructuring, TERF and refinance scheme for payment of salaries to support the businesses during adverse COVID times. He said that more than 90 percent beneficiaries of the scheme for restructuring of principal amount were the small borrowers. More than Rs600 billion loans were restructured.

“In total, the State Bank provided a relief of more than 2 trillion rupees to the business community through various schemes to help the Economy to get on track,” Dr Reza Baqir said. Due to the prudent policies of the government, the debt to GDP ratio did not increase during the COVID period while in the developed economies, it increased by 10 to 15 percent.

He said as far as the TERF scheme is concerned, Rs436 billion financing has been approved out of which 500 million dollars have already been disbursed while the disbursement of remaining amount is in pipeline. Once the full amount is disbursed, then we can think of further extending this scheme.

The Governor informed the LCCI President that the financing scheme for salaries was an emergency measure to prevent layoffs which was availed by many sectors. For the support of hospitality sector, the State Bank can launch a separate scheme for their working capital needs.

Dr Reza Baqir said that the LCCI should provide State Bank with the names of the major players who are trading with Central Asia so that a meeting can be arranged with representatives of various banks to resolve the issue of banking channels.

He said that the LCCI recommendation of giving borrowers the access to their Electronic Credit Information Bureau (eCIB) would be seriously considered. He said that a helpdesk should be established in LCCI to help the women entrepreneurs, particularly in the cottage industry to avail the various State Bank schemes for the women entrepreneurs. He said that the State Bank is encouraging the Banks to increase their lending for low cost housing.

LCCI President Mian Tariq Misbah said that the Temporary Economic Refinance Facility (TERF) for purchase of new imported/locally manufactured plant & machinery for setting up new projects should be extended further as it expired on 31st March 2021. The SBP Refinance Scheme for the payment of Salaries which expired on September 30, 2020, should be initiated again, particularly for the hospitality sector e.g. restaurants, marriage halls which have suffered the most during to the lockdown, he suggested.

He said that the rice exporters are unable to export the commodity due to sanctions and payment issues. In this regard, the State Bank should work on a mechanism of exporting rice to Iran through barter trade mechanism. The commercial importers should be allowed to import against advance payments up to US$20,000.

He said that the time for processing E-form needs to be decreased. The E-form should be approved within an hour on exporter’s request including weekends, he added.

Copyright Business Recorder, 2021