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PESHAWAR: Centre for Governance & Public Accountability (CGPA) in collaboration with Small & Medium Enterprises Development Authority (SMEDA) organized a public-private dialogue on access to finance by SMEs here the other day, said a press release.

The event was aimed at discussing the issues faced by business community of Peshawar due to difficulties in access to financing (bank loans for starting or expanding businesses, etc.) and also to create awareness regarding the facilities that the banking sector is offering to business community.

Entrepreneurs from various trades and officials of renowned banks operating in Peshawar, as well as, State bank of Pakistan joined the dialogue. Those who participated included Rashid Aman Provincial Chief SMEDA, Minhaj Ud Din ex-Chairman All Pakistan Exporters Association, Adnan Jalil ex-President Peshawar Chamber for Small Traders & Industries, Asif Awan President Dairy & Livestock Association, Lubna Tajik United Nation Industrial Development Organization, Ejaz Khan Afridi Executive Member SCCI, Dr. Tallat Ullah (SME Bank), Abdullah Afridi (SBP), Suleman (SBP) , Bahar Ali Bank Of Khyber, Afsheen Malik ex-VP Women Chamber of Commerce & Industry and Abdul Basit Ghani (BoK).

Bank officials explained what prevailing SME financing schemes are being offered to business community along with parameters considered during the scrutiny process of loan applications. Key steps of the process were also explained for the participant.

Business community put forth the unique requirements which are not currently being addressed. Main hurdles being faced during pursuing loan applications remained part of the discussion.

Common problems that were identified during the dialogue include lengthy, cumbersome and inflexible loan application procedure, complex documentation requirements and less or inaccurate knowledge about financing schemes.

Bank officials talked about loans and its application procedure. They said accounting system adopted by most of the SMEs is not appropriate enough to be considered by banks for approving loans. They talked about lack of awareness among business community about financing scheme offered by banks.

It was noted that financing solution tailored to the need of a specific industrial cluster is not offered by any of the bank for females; opening a business account is a difficult procedure, and most of the loan applications are scrutinized at head office level.

The session observed that relevant observations communicated to the concerned branches for rectification or appropriation make the procedure more lengthy; banks should bring Shariah compliance to the financing scheme they offer. Government is introducing development projects to start and facilitate new businesses, and banks may develop their financing schemes that could be tailored to these projects.

SBP may develop a standard system for tracking of financing application submitted to banks. Account opening for civil society organization is very difficult that needs to be simplified. SBP must also focus on microfinance segment and regulation as per needs of customers. There is a need that female entrepreneurs must also be considered while making policies and regulations of micro-financing. It was told that specific loan scheme for food processing unit is available at Bank of Khyber.

The participants of the dialogue also prepared recommendations for increasing opportunities for business community to avail the financing schemes from different banks and SMEs.

The participants stressed the need for awareness campaigns by the banks about financing schemes being offered to MSME sector. They said procedural requirements should be relaxed, documentation should be simplified and initial scrutiny of application may be done by the business community through hiring a consultant and by the concerned bank officer from where the application is filed and adopting of credible accounting system by the business community.

Beside, other working area identified for the dialogues, CGPA has plan for another round of discussion on the same topic, for further detailed discussion between business community and relevant government authorities.

Copyright Business Recorder, 2022


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