The Senate Standing Committee on Finance was informed on Wednesday that the Small and Medium Enterprises (SME) Bank will be completely closed in the next few days.
Tahir Qureshi, President of SME Bank, gave a detailed briefing to the committee on the bank’s closure. He said 18 branches have already been closed while 5 more branches are in the process of closure. The complete closure of SME Bank is expected to occur in the next few days, he added.
Committee members reacted strongly to the closure, with some warning that this could kill the SMEs in Pakistan.
Senator Mohsin Aziz raised alarm over the potentially high-interest rates that small entrepreneurs might face from other banks, stating, “Banks will now give loans to small entrepreneurs at 40 percent interest”. The senator suggested that the parliament should intervene before the SME Bank is completely closed. On another note, he briefly highlighted issues with the National Bank, where default rates are very high.
Chairman Committee Senator Saleem Mandviwalla inquired about the government’s alternative plan for supporting the SME sector, seeking a solution to the impending crisis. The Finance Secretary proposed encouraging private commercial banks to step in and provide support to the SME sector. He suggested that the State Bank Consulting Incentive Scheme could be implemented for this purpose, although specific details were not provided during the briefing.
The committee members vowed to continue deliberations on potential solutions to safeguard the interests of small and medium-sized enterprises operating in the country.