Working capital needs: SBP launches refinance scheme for SME sectors

The State Bank of Pakistan (SBP) has launched a refinance scheme for meeting the working capital requirements of select sectors of small and low-end medium enterprises. According to SBP, enhancing access to finance for small and medium enterprises (SMEs) is one of the priority areas of the State Bank. In an effort to increase flow of credit to SMEs, a refinance scheme for meeting the working capital requirements of selective sectors of small and low-end medium enterprises is being launched.
Financing is initially available to meet the working capital requirements of some eight selective SME sectors including Information Technology (IT), Dates processing, Surgical goods, Furniture, Gems and jewelry, Leather industry, Fruits, vegetables and food processing & packaging and Printing & packaging.
Under the scheme maximum financing tenor under the scheme is one year and all small enterprises (SEs) as defined in SBP''s Prudential Regulations (PRs) for SME financing are eligible under the scheme. Maximum financing limit for SEs is the same as defined in SBP''s relevant PRs.
Medium enterprises (MEs) with annual sales of up to Rs 300 million are eligible under the scheme. Maximum financing limit for MEs under this scheme is Rs 50 million.
According to SBP, end user rate is up to 6 percent p.a. with SBP''s refinance rate of 2 percent p.a.
SBP has advised the banks/DFIs to review the scheme and apply for refinance limits under the scheme to Director, Infrastructure, Housing & SME Finance Department, SBP, Karachi preferably by January 31, 2018. The scheme will be effective from January 31, 2018. Documentation and reporting requirements under the scheme will be shared in due course.