Insurance can make banks comfortable in financing SMEs: Thaver


Karachi: The Union of Small and Medium Enterprises (UNISAME) reiterated that only insurance can make the banks comfortable in financing the SMEs and urged the federal secretary, ministry of commerce to establish insurance company for covering the transactions, ventures and inventory of the SMEs by low cost premium.

President UNISAME Zulfikar Thaver speaking on a private television business channel said the private sector insurance companies are charging heavy premium which is not affordable and low cost insurance is required to undertake the non-realization of proceeds and failure of the SMEs to recover invoice values.

He said unless the banks are made comfortable , they will not finance the sector as they do not have the expertise in risk management. The commercial banks need to adopt modern concepts of banking such as collateral management. . and warehouse receipt financing. The financing of exports to third world countries needs export credit guarantee insurance which private companies are not inclined to undertake. Only the state insurance company can cover the risk at affordable cost.

Answering question of the host Thaver said the two things required for SME promotion are lowering cost of doing business and making doing of business easy.

Thaver emphasized the need for an efficient and competent Small and Medium Enterprises Developing Authority (SMEDA) which is unfortunately left with insufficient personnel, funds and attention.

He said the micro to medium sector needs training, uplift by filing the technological gap,access to finance, marketing support and encouragement to face global challenges.

He lamented that the PMLN government although considered business friendly neglected the sector and did not focus on SME promotion and development on fast track of the majority sector.

Thaver highlighted the road map given by UNISAME and urged the government to implement the SME policy of 2007 in letter and spirit ensuring the fulfillment of promises made therein.

The sector needs land, finance, uninterrupted energy, reduction of import duties on raw material, marketing support, insurance and modern logistics facilities coupled with collateral management of crops and inventory.

UNISAME urged Younus Dagha the ministry of commerce federal secretary to revisit the SME policy 2007 and do the needful promptly.

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