AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi, May 30, 2018 (PPI-OT): The Union of Small and Medium Enterprises (UNISAME) has invited the attention of the State Bank of Pakistan (SBP) to the need to offer the facility of Export Refinance (ERF) to the SME sector exclusively rather than the big groups who are misusing the facility by investing in properties rather than the inventory. The big exporters can finance themselves by liquidating their properties. The big exporters have borrowed huge amounts and exhausted the limits and not left sufficient funds for the SMEs.
President UNISAME Zulfikar Thaver said huge amounts of the commercial banks are blocked as big exporters have obtained funds under ERF and are unable to repay due to decline in exports. The decline in turnover has exposed that the ERF funds were used to buy properties and ERF invested in real estate by the big entrepreneurs.
The exporters were given the subsidized finance to promote exports and the shrewd big businessmen invested their own money to buy properties and kept deposits in bank at higher rate. They even bought luxury cars with borrowed finance instead of inventory. It would be wise to finance the big exporters only against specific orders/contracts in hand and that too provided the big exporter also shows some his own investment in the transaction.
Thaver said the commercial banks have now realized that in financing the SMEs the risk is split as instead of financing one big exporter they can finance 100 SMEs and the chances of default from among the 100 SMEs is very low, whereas if the one big exporter defaults the loss is substantial. It is pertinent to note that the SMEs are adding value to the goods and they deserve to be facilitated.
The SMEs in textiles, rice, leather and light engineering are not accommodated by commercial banks due to lack of collateral. It is very unfortunate to note that in many cases the big exporters have borrowed funds against goods which are of less value than declared and in some cases the goods do not exist physically.
Many big exporters despite of fall in their businesses have not changed their lifestyle and openly state that the money is not theirs as they have been exporting with borrowed money and worse comes to worst they will hand over the keys. They have made money because the value of properties have increased manifolds and they do not mind paying penalties for non-performance.
UNISAME experts have called upon the senior executives of commercial banks to carry out surprise inspections of warehouses under them to check the quantity, quality and condition of the goods to ascertain the values against which they have financed.
For more information, contact:
Union of Small and Medium Enterprises (UNISAME)
75/1 3rd Commercial Street,
Phase IV, D.H.A., Karachi, Pakistan
Tel: +92-21-35884225-6
Fax: +92-21-35380642
Cell: +92-300-8245307, +92-321-8245307
Email: unisame@gmail.com