KP Government and Bank of Khyber Agree to Launch Rs 12 Billion SME Refinance Initiative – Pakistan

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PESHAWAR: Khyber Pakhtunkhwa Government and Bank of Khyber on Thursday signed a Memorandum of Understanding (MoU) to launch Rs 12 billion refinancing programs to meet capital and upgrading needs of Small and Medium Enterprises (SMEs) ) of the province.

The programs will likely be available for SMEs in the second week of next month and will be executed by the BOK in coordination with the Department of Industries.

BOK Director General Ali Gulfaraz and Provincial Industries Secretary Zulfiqar Ali Shah signed the MoU in a special ceremony, which was also attended by Provincial Finance Minister Taimur Saleem Jhagra. and Special Assistant to the Chief Minister of Industries, Abdul Karim Khan Tordher.

The finance minister said the initiative was taken in line with Prime Minister Imran Khan’s vision for the development of the SME sector in the province.

The disbursement of money is expected to start the second week of next month

A BOK official said Dawn that under the initiative, Rs 12 billion would be disbursed by 2030 to all established businesses under the SME sector.

“2.5 billion rupees will be disbursed annually under the scheme,” he said.

The official indicated that the program would have two modes, including the satisfaction of the capital needs of SMEs as well as the modernization of their machinery and that Rs6 billion had been allocated for each of them.

He said that under the schemes, SMEs would be eligible to receive the capital of Rs 1-20 million.

The official said the SMEs would pay nothing back to the bank in the first year and pay two percent of the profits made on the money in the second year.

“It’s almost a free loan initiative for SMEs in the province. Established companies in all sectors are eligible,” he said.

The official said the bank was working to accelerate the launch of the program, which would be available for SMEs by March 15.

Meanwhile, a statement published here said that the subsidized sharia-compliant, government-supported refinance programs were unique, as the applicable price for SME upgrading was zero percent per annum for the first year and 2 percent per annum for the next four years for the purchase of new local and imported machinery and generator with a capacity of up to 500 kilovolt-amperes.

He added that, on the other hand, the pricing applicable in working capital was zero percent per year for the first year and two percent per year for the following two years at most.

Last month, the provincial cabinet approved subsidy schemes for the province’s SME sector. This was part of the KP Industrial Policy, 2020.

The program will have two components, including the Raast Modernization Funding Program and the Raast Working Capital Funding Program for SMEs. It aims to solve the problem of SMEs’ access to credit.

Providing a finance facility to the SME sector on attractive terms in the current scenario will support the liquidity needed to sustain businesses and associated employment. Furthermore, it will also encourage the growth of existing and new businesses.

Posted in Dawn, February 19, 2022

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