KARACHI - The Union of Small and Medium Enterprises has urged the Ministry of Finance to put leasing companies under the control of State Bank of Pakistan (SBP) instead of Securities Exchange Commission of Pakistan (SECP) as the leasing companies have failed to finance entrepreneurs due to lack of funds whereas the commercial banks, Islamic banks and financial institutions under SBP are doing much better comparatively.
He said the leasing companies are borrowing money from the banks at KIBOR plus rates and are leasing vehicles, plant, equipment and machinery on very high rates to cover their expenses and profits which is becoming almost 24pc per annum.
The Union in a message to the Leasing Association of Pakistan (LAP) urged them to take up the matter with the Ministry of Finance and request for placement and enlistment with the SBP as financial institutions for financing under the monitoring and control of the central bank.
The Union has invited the attention of the Finance Ministry to the need for financing SMEs under leasing as it is asset based financing and makes the borrower and the lender comfortable due to the title and ownership remaining with the leaser till such time all encumbrances are fully paid.
The Union has emphasised the fact that leasing finance can resolve the issue of collateral demanded by the banks.