SME Asaan Finance Scheme: FPCCI chief underscores need for ‘lower’ interest rate

KARACHI: President FPCCI, Mian Nasser Hyatt Maggo has expressed his shock over the interest rate of up to 9 percent under State Bank of Pakistan (SBP)’s SME Asaan Finance Scheme (SAAF).

The SMEs were appreciative of the announcement of collateral-free SAAF Scheme; but, the interest rate of 9 percent makes it unaffordable, unproductive and unsupportive for SMEs, he added.

He said that it is a welcome step that SBP has selected 8 banks to get financing under SAAF Scheme from SBP; however, it makes no economic and commercial sense to allow these 8 banks to charge up to 8 percent in addition to 1 percent of SBP’s lending fee to banks.

Mian Nasser Hyatt Maggo has demanded that SAAF scheme should not have a total interest rate over 3.0 percent which will make it at par with TERF to make it affordable for SMEs, i.e. 1 percent for SBP financing and 2 percent for banks’ margin.

He said that in the post-pandemic scenario, nowhere in the world SMEs can afford to get capital at 9 percent and pay it back without getting bankrupted.

He also noted, with concern, that SBP itself sets maximum interest rate under TERF Scheme at 3 percent for larger enterprises and business groups; and, for SMEs, it has taken a discriminatory and unsupportive stance.

Mian Nasser Hyatt Maggo said that he disagrees with the assertion by SBP that all stakeholders have been taken onboard on SAAF Scheme; as FPCCI’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.

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 percent will make the SAAF Scheme unaffordable for them.

He 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.

Copyright Business Recorder, 2021