PIAF appreciates SBP for extending loan deferment policy for SMEs

The Pakistan Industrial and Traders Association Front (PIAF) has lauded the central bank for extending loan deferment policy for SMEs till Sept end, recommending the SBP governor to play his role for real implementation in loan disbursement by the commercial banks.

PIAF Chairman Mian Nauman Kabir, in a joint statement with senior vice chairman Nasir Hameed Khan and vice chairman Javed Siddiqi, said that the State Bank of Pakistan has extended the deadline for small and medium businesses to apply for one-year moratorium on loan repayment till Sept 30, considering the fact that COVID-19 pandemic is continuing to stress the cash flow of the industry which is a good step but these directive should also be followed by the commercial banks, he added.

Kabir said it’s a better strategy that the central bank has taken the Pakistan Banks Association onboard and then announced a set of measures to help businesses to manage their finances amid growing concerns about the potential economic impact of the COVID–19 pandemic. He said that the decision would prove to be helpful for borrowers.

According to the central bank, the banks have so far deferred Rs593 billion of principal amount of loans of over 359,000 borrowers. A very large number of borrowers – 95 percent of total beneficiaries of this scheme have been small borrowers including SMEs, consumer finance, and microfinance. A key measure was the deferment of principal amount of loans and advances by banks and development finance institutions.

PIAF senior vice chairman Nasir Hameed said that it is expected that more businesses, who were not able to avail the facility, will now benefit from this extension. The facility is available for small and medium enterprise, consumer, housing, agriculture and micro financing. Under the facility, businesses and households could request for the deferment of their loans and advances for a period of one year. The measure also ensured that the deferment of principal would not affect borrower’s credit history.

PIAF vice chairman Javed Iqbal urged the authorities to ensure provision of this facility on urgent basis to the small businesses, which are facing severe financial crisis. He said that in April, the State Bank had announced incentive package to help businesses avoid layoffs while directing banks to provide refinancing at zero percent. He added that earlier the central bank had also announced an incentive scheme entitled Refinance Scheme for Payment of Wages and Salaries to the Workers, enabling provision of concessional credit for payroll finance to businesses. But the reality is that banks have refused to offer such loans, except extending only Term Finance Funding, with a restriction of on-time payment of markup and other conditions.

PIAF leadership said that utility companies have neither provided any relief in tariff nor extending dates of bills payment, contrary to the commitment of the government. They said that same is the case with the payment of Income tax and Sales tax refunds announced by the government.