State Bank of Pakistan allows financing to non-farm sector

Karachi: The State Bank of Pakistan (SBP) has expanded the scope of a scheme to improve access to financing in flood-affected areas by including non-farm sector, a bank statement said on Wednesday.

The refinancing scheme for revival of the small and medium enterprises (SMEs) and agricultural activities in the flood-hit areas was introduced in November 2010, it said.

Under the scheme, financing is available at concessional markup rates through banks and development financial institutions (DFIs). A sum of Rs10 billion has been allocated for the scheme.

“Banks and DFIs have shown a rather dismal performance in utilising the allocated funds,” it said.

In order to improve access to finance for the SMEs and farmers in the flood-affected areas, the central bank has decided to expand the scope of the scheme by including non-farm sector in it.

The validity of the scheme has been extended up to November 30, 2012 from October 31.

The SBP said that the primary objective of the scheme was to revive agriculture activities in the flood-affected areas, so banks and DFIs should not provide more than 25 percent loans to non-farm sector, out of limit sanctioned for agricultural financing under the scheme.

Refinance limits already sanctioned in favour of selected banks for agriculture and the SMEs under the scheme for 2010/11 will continue to be available up to the expiry date of the scheme. They can also apply for enhancement of limits after utilisation of their existing limits, the central bank said.

Furthermore, other interested banks and DFIs having branches in the flood-affected areas can also apply to the SBP to seek fresh limits under the scheme separately for agriculture and the SMEs, the central bank added.

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