Due to multiple reasons, the Refinance Scheme for Small Businesses by the State Bank of Pakistan has failed to formulate. The reason for this is that commercial banks are not completely equipped to provide credit lines to Small and Medium Enterprises (SMEs).
Top officials dealing with the issues confirmed, “The SBP’s Refinance Scheme for Small Businesses is failing to take off because our banks and their staff have never focused on credit support for SMEs.”
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Despite the claims by the State Bank of Pakistan that till now 700 to 1,000 companies approached the commercial banks seeking for loan facilities ranging from Rs65 billion to 90 billion, the uproar from the Small and Medium Enterprises has been increasing.
The banks have sanctioned loans worth Rs23 to 30 billion out of these loan applications. The banks are hesitant to go forward even though the Ministry of Finance placed a cost-sharing mechanism with the SBP.
This gives Rs30 billion subsidy to banks to absorb the initial 40% of this scheme to protect jobs following the COVID-19 pandemic.
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Most of these banks and the staff is trained just to serve big companies. Most of the bank branches have not received guidelines from the headquarters on the refinance scheme and how to deal with the customers.
One owner of SME said, “These banks branches are simply clueless how to deal with these loan applications.”