KARACHI:
The State Bank of Pakistan (SBP), in order to facilitate the access of the small and medium enterprise (SME) sector to finance, has increased the net borrowing limit to Rs 10 million.
The banking regulator has amended the prudential regulations for SME financing and Regulation R-4 for SMEs on net funding limit has been updated accordingly to increase the net lending limit for SME borrowers from Rs 5 million to Rs 10 million Rs.
The SME, Housing and Sustainable Finance Department of the SBP has issued a circular, advising the heads of all banks and development finance institutions (DFIs) to strictly comply with the regulatory measures taken in light of the National SME Policy 2021.
“Banks and DFIs can take net exposure (facilities extended on the basis of cash flow of an SME secured solely by personal guarantees) up to Rs 10 million to an SME borrower,” the circular read and clarified “the net exposure limit shall not includes the net limits of consumer finance, such as credit cards and personal loans, allowed to an SME sponsor under prudential consumer finance regulations,” it said.
The central bank had already revised the definition of SMEs by amending the respective regulations – Regulation SE R-1 and Regulation ME R-1.
Under the revised definition, a business with an annual turnover of up to Rs 150 million will be categorized as a ‘small business’, while a business with an annual turnover of more than Rs 150 million to Rs 800 million will fall under the category of ‘medium business’.
The central bank advised banks and DFIs to ensure circulation of the amendment among all their offices and branches for compliance in true letter and spirit, while non-compliance with the Prudential Supervision Regulations would lead to penalties under the relevant provisions of the Ordinance of Banking Companies, 1962.
a href=”https://tribune.com.pk/story/2488872/sbp-enhances-clean-lending-limit-for-smes”>Source link
