The State Bank of Pakistan (SBP) on Thursday launched SMEConnect, a centralised digital platform for small and medium enterprises (SMEs) to apply for financing from banks and development finance institutions (DFIs). From November 1, all SME financing applications will be received exclusively through the platform.
The SBP said SMEConnect will streamline the application process and improve accessibility, efficiency and transparency in SME financing. Applicants will be able to track the status of their applications in real time and, in case of rejection, view the reasons.
Applicants who visit bank or DFI branches or websites to apply for financing will be directed to SMEConnect. The central bank has advised all banks and DFIs to display the platform’s link prominently on their websites. It has also directed them to ensure their SME teams and field staff understand the platform and guide applicants in using it. A tutorial video is available on the portal.
The platform includes a live dashboard that gives the SBP complete visibility into financing applications. It will provide real-time data on applications received, processed, approved, disbursed and rejected, at the level of individual banks and DFIs as well as across the industry.
Bankers said any bank can reject an SME financing application, as banks are regarded as the first protectors of depositors’ money. They said neither the government nor the central bank can compel a private bank to lend to SMEs unless the bank is satisfied.
Past efforts to stimulate the sector have fallen short because banks and DFIs were unwilling to take risks, and instead parked their liquidity in risk-free government papers for higher returns. A day before the launch, financial institutions offered Rs4.9 trillion for investment in treasury bills, and the government raised Rs1.9 trillion, exceeding the auction target.
SMEs also have a higher default rate than other sectors, making lending to them riskier for financial institutions than investing in the equity market. The government has nonetheless been encouraging SME financing, seen as key to boosting business and industrial activity, as economic growth remains at 3.7 percent.
It has also introduced another investment option for banks and DFIs through the subsidised and protected Prime Minister’s Housing Scheme, where investment levels are higher than in SMEs. The SBP said the platform reflects its commitment to promoting financial inclusion, supporting entrepreneurship and strengthening the SME financing ecosystem to achieve inclusive economic growth.
