Collateral free loans up to Rs10m to businesses soon: Reza Baqir

Small businesses, cottage industry in this scheme will be on 9pc, which otherwise get loans at 24pc

LAHORE   -  State Bank of Pakistan Governor Dr Reza Baqir has said that financing of cottage industry up to Rs10 million without collateral would start soon. 

Talking to Lahore Chamber of Commerce and Industry (LCCI) President Mian Tariq Misbah and Vice President Tahir Manzoor Chaudhry, he said that the government will invite Expression of Interest from banks for inclusion in this scheme. SBP Governor said the government will give guarantee to banks against losses. He said that the end user rate for the small businesses and cottage industry in this scheme would be 9 per cent which otherwise get loans at 24 per cent. He said that to facilitate the growth of IT sector, particularly the startups, foreign exchange laws have been relaxed and made more business friendly. The foreign funding in IT sector will be facilitated by relaxation in laws. Banks have been fully delegated to handle the payment issues of IT companies. He said that the IT companies can now get web and digital services from abroad for up to $ 200,000/- without the approval of SBP. Previously this limit was $ 10,000. He said that SBP has initiated various schemes like principal restructuring, TERF and refinance scheme for payment of salaries to support the businesses during adverse Covid times. He said that more than 90per cent beneficiaries of the scheme were small borrowers. More than Rs600 billion loans were restructured.

“In total, the SBP provided a relief of more than Rs2 trillion to the business community through various schemes to help the economy get back on track”, Dr Reza Baqir said. Due to the prudent policies of the government during the pandemic, he said, the debt to GDP ratio did not increase which raised by 10 to 15per cent in developed countries. 

He said that as far as the TERF scheme is concerned, Rs436 billion financing has been approved. “Once the full amount is disbursed, we can think of further extending this scheme. We also have to keep the import payments in check as this scheme is mainly for importing machinery.” he said. 

Mian Tariq Misbah said that the Temporary Economic Refinance Facility (TEFR) should be extended. He urged SBP to organize orientation sessions to apprise the business community about the functioning of Pakistan Single Window System before its launch in August 2021.

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