During a recent session, the Senate Standing Committee on Finance received unsettling news regarding the imminent closure of the Small and Medium Enterprises (SME) Bank in Pakistan. Tahir Qureshi, the President of SME Bank, provided a comprehensive overview of the bank’s closure process, revealing that 18 branches have already been shuttered, with an additional 5 branches slated for closure in the near future. The complete shutdown of the SME Bank is anticipated within the coming days.
Why SME Bank is Closing?
This revelation stirred strong reactions among committee members, who voiced concerns about the potentially adverse effects on the SME sector. Senator Mohsin Aziz, in particular, sounded the alarm regarding the looming high-interest rates that small entrepreneurs might encounter from other financial institutions, warning that “Banks will now give loans to small entrepreneurs at 40 percent interest.”
He urged parliamentary intervention before the SME Bank’s complete closure and briefly highlighted issues with the National Bank, which is grappling with high default rates.
Chairman of the Committee, Senator Saleem Mandviwalla, sought clarity on the government’s contingency plan to support the SME sector and avert a crisis. The Finance Secretary proposed encouraging private commercial banks to step in and provide assistance to SMEs, suggesting the implementation of the State Bank Consulting Incentive Scheme for this purpose. However, specific details regarding this proposal were not furnished during the briefing.
Committee members vowed to continue their discussions, actively seeking solutions to safeguard the interests of small and medium-sized enterprises operating in Pakistan, recognizing the vital role they play in the nation’s economic landscape.
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