The State Bank of Pakistan is going to launch two important initiatives, which include Special Refinance Facility for small, and medium enterprises (SMEs) of terror war affected and neglected areas of NWFP, FATA and Gilgit-Baltistan, and Credit Guarantee Scheme worth Rs one billion for small and rural enterprises.
Sources told Business Recorder on Monday that these two schemes would be launched under the Financial Inclusion Program (FIP) worth GBP 50 million grant from UK's Department for International Development (DFID) to promote inclusive economic growth through provision of sustainable financial services to the poor, small entrepreneurs, women and marginalised communities.
FIP will be implemented over five years, from July 2008 to June 2013, and SBP has already launched two key microfinance components--the Microfinance Credit Guarantee Facility (MCGF) and the Institutional Strengthening Fund (ISF)--on priority basis in December 2008 to meet the funding needs and enhance intermediation capacity of microfinance providers.
Now under FIP two more schemes including Special Refinance Facility (SRF) and Credit Guarantee Scheme (CGS) have been finalised by the central bank. "The State Bank is going to launch Credit Guarantee Scheme, which has been finalised in consultation with stakeholders and a thorough independent preview, worth Rs one billion during this week to ease the flow of funds to for small and rural borrowers", sources said.
CGS would be launched for small and rural enterprises, which may fail to retire their outstanding loans obtained from microfinance institutions, they added. The second scheme, SRF, is for the neglect and war-affected areas of NWFP, FATA and Gilgit-Baltistan and under the scheme financial assistance would provide soft terms and subsidised mark-up rates to the SMEs located in these areas.
State Bank of Pakistan Governor Salim Raza will formally launch these schemes on Friday, March 19, 2010 at SBP head office, sources said. The program has been designed in line with the goals of Pakistan's Microfinance Strategy which aims to transform the microfinance sector from a subsidy based to a market-based system, they said.
In addition to the development of the microfinance sector, the program also aims to support financial inclusion in the country through improved remittance systems, branchless banking, expansion of SMEs and rural financing, they added.
In addition, FIP is supporting Remittance and Anti-money laundering and Counter Terrorism Financing for which the support is being provided to Pakistan Remittance Initiative (PRI) and Financial Monitoring Unit (FMU). In the next phase, FIP will launch Financial Innovation Challenge Fund worth GBP 10 million and a technology fund worth GBP 2 million to promote financial innovation and support alternative delivery channels.