On Wednesday, the Small and Medium Enterprises (SME) Bank informed the Senate Standing Committee on Finance that it would soon be shut down entirely.
SME Bank President Tahir Qureshi provided the committee with a thorough explanation of the bank’s closure. 18 branches have already been closed, according to him, and 5 more are in the process of being closed. He added that the final shutdown of SME Bank is anticipated to take place soon.
Members of the committee expressed strong reactions to the closure, with some cautioning that it might be fatal for Pakistan’s SMEs.
Banks will now lend money to small business owners at a 40 percent interest rate, according to Senator Mohsin Aziz, who expressed concern about the potentially high interest rates that other banks may charge small business owners. The senator suggested that before the SME Bank is completely shut down, the parliament should take action. He also briefly discussed problems with the National Bank, where there are high default rates.
In order to find a solution to the impending crisis, committee chairman Senator Saleem Mandviwalla inquired about the government’s alternate plan for assisting the SME sector. The finance secretary suggested enlisting the assistance of private commercial banks to assist the SME sector. Although specifics weren’t given during the briefing, he suggested that the State Bank Consulting Incentive Scheme could be used for this purpose.
The committee members vowed to keep thinking through options for protecting the interests of small and medium-sized businesses doing business in the nation.
