LAHORE-The State Bank of Pakistan (SBP) wants to increase the dialogue with the business community and is committed to serve the un-served sectors like SMEs and women entrepreneurs. These were the words of the Governor State Bank of Pakistan Dr Reza Baqir during his visit to the Lahore Chamber of Commerce and Industry (LCCI) on Friday.

President LCCI Mian Tariq Misbah, Senior Vice President Nasir Hameed Khan, Vice President Tahir Manzoor Chaudhry, President SAARC Chamber of Commerce Iftikhar Ali Malik, former Presidents Mian Misbah-ur-Rehman, Tahir Javed Malik, Abdul Basit, former SVP Amjad Ali Jawa, Khawaja Khawar Rasheed, former Vice President Zeshan Khalil, Deputy Governor SBP Seema Kamil, Murtaza Syed, Chief Manager, State Bank of Pakistan (SBP) Javaid Iqbal Marth, Director Exchange Policy Department SBP Arshad Bhatti and LCCI Executive Committee Members were also present on the occasion. 

The Governor SBP said the State Bank is focusing heavily on Digital Financial Services and is bringing a system where payments would be done in seconds. He said the interest rate has been decreased by 6 percent and the exchange rate is now moving in a two way orderly fashion. Highlighting the steps taken by the State Bank of Pakistan, Dr. Reza Baqir said, in recent times, to facilitate businesses affected by the COVID-19, the SBP has decreased the interest rate, secondly he said “We have deferred around Rs. 650 billion principal payments out of which 90 percent beneficiaries are small entrepreneurs (borrowers of microfinance banks).

He said SBP is giving the due consideration to LCCI demands regarding Electronic Credit Information Bureau (eCIB) and is looking into it positively, adding that policy on eCIB will be announced in few days.

Dr. Reza Baqir said, “to support the businesses in their mark-up payments, Rs. 200 billion loans were restructured. He said under PM Rozgar Finance Scheme Rs. 232 billion were given for the salaries of employees, adding that, all schemes provided a relief of around more than Rs. 1 trillion.

The Governor SBP said businesses can avail the Temporary Economic Refinance Facility (TERF) till 30th March 2021. Under TERF they can get a long term loan for 10 years on 5 percent interest, adding that businesses can use these loans for Balancing, Modernization and Replacement (BMR). 

He said the commercial banks have been given the target to increase the housing finance to 5 percent of the loan portfolio by December 2021. This will help around 20 to 30 allied sectors of housing.

He said the facility of Roshan Digital Account being provided to overseas Paskistanis through which the account can be open without going to embassy and the attestation of any document, adding that Pakistanis having assets abroad can also avail this facility. He said all these achievements are the result of the institutional reforms.

Governor SBP said Pakistan Credit Guarantee Corporation is being set up through which the banks will get 60 percent risk cover for giving loan to SMEs, adding under markup subsidy scheme, small houses will be financed for 3 to 5 percent.

President of the Lahore Chamber of Commerce and Industry said that there are a large number of businesses who are not able to clear their bank liabilities in time due to the current liquidity crisis and hence their names are included in Electronic Credit Information Bureau (eCIB). This makes it hard for them to secure credit from any financial institution. We would request the State Bank to relax this condition till June 2021.

He said it has been observed that even after the customers fully settle their overdue payments amicably with the banks, their names are still reported in the eCIB under write-offs. This matter needs consideration, adding the customers of all banks should also be given access to check their own status in eCIB database and banks should intimate customers before reporting any overdue in eCIB and give them reasonable time for reconciliation and settlement of overdue liabilities. 

He said small traders have suffered a lot in the recent times and the State Bank should devise new schemes of interest free loans which would help the traders to revive their businesses, adding that the SBP should form a high powered committee with representatives of private sector and all major banks with a clear timeline to develop a bankable and viable structure for increasing the lending to the housing sector. 

Mian Tariq Misbah said interest rate should be reduced further from 7% to 5% in line with the regional economies. The regional interest rates are (e.g. India 4%, Bangladesh 4.75%, China 3.85%, and Sri Lanka 4.5%), adding that the incentives which are currently provided to the five zero rated sectors should also be provided to the other export sectors of the economy e.g. rice, halal meat, processed food, engineering and pharmaceuticals etc. 

This matter has already been discussed with Advisor to PM on Finance & Revenue – Dr. Abdul Hafeez Sh. He said the SBP’s recent initiative of allowing the businesses to apply for deferring the payment of principal amount on loans for one year should be extended till June 2021.

The State Bank should facilitate the businesses in all the major cities of the country by allowing them to directly pay the customs duty on imports at certain designated branches of National Bank in their respective cities, he added.

He further said the State Bank is only considering the businesses that defaulted before January 1st 2020 for the restructuring of loans. This cut-off date should be moved back to January 1st 2019 as many businesses had started getting affected due to the slowdown in economy before January 2020. We would request the State Bank to facilitate all businesses in the restructuring of loans so that they are able to revive their operations.

President LCCI said the food sector has suffered a lot in the recent times due to adverse economic situation caused by COVID-19. In this regard, the State Bank should take steps for enhancing provision of credit at low interest rates for the working capital requirements of the food sector.

He said in the recent State Bank’s scheme of providing loans for the payment of salaries of employees, the banks didn’t facilitate the businesses which had defaulted on loans. Since this scheme was meant to ultimately facilitate the employees belonging to lower segments of the society and not the businesses themselves, we would therefore request you to announce a special scheme for the businesses which were not able to avail the credit facility previously due to defaults.

LCCI Senior Vice President Nasir Hameed Khan said, “We request the State Bank to direct the commercial banks to not ask their clients to submit the affidavit regarding the price difference between declared invoice value and assessed value by the Custom Authorities while issuing the E.I. (Electronic Import) Form to the importers. This exercise is causing a lot of inconvenience to the business community”. 

He said in order to enhance our exports to the untapped potential markets like Russia and Central Asia, formal Banking Channels should be established on priority basis. We would also request the State Bank to devise a special mechanism for enhancing our trade with Iran. 

Vice President LCCI Tahir Manzoor Chaudhry said in 2018, the commercial importers were allowed to make imports against advance payments of 10,000 dollars. Instead of extending this limit to 20,000 dollars as promised, it has been disallowed. Please reconsider this decision.