Karachi, December 21, 2020 (PPI-OT): 1. Separate SME segment has neither been properly established nor given its due weightage in the banking industry; majority of banks cater to well established corporate sector and try to kind of accommodate SME businesses from same corporate window.
2. SMEs portfolio in most of the banks is not a priority segment, accordingly lending targets are not set, in line with the needs and growth of SMEs; In the year 2020 COVID19 pandemic is the main reason for almost no growth in SME portfolio.
3. Need assessment for SME sector has not been focused. Different segment of businesses operating at SME scale has not been identified.
4. Marketing staff (front end staff) needs thorough training based on banking products and customer need assessment to facilitate the customer.
5. Being an undocumented economy trail of SME business dealings could not be ascertained and they usually have different statements for different people, e.g. general public, tax authorities, partners and themselves.
6. Commercial banks are unable to provide loans to SMEs because most of SMEs are still not able to keep proper financial records or to present fair and clear financial statements.
7. In general SME businesses are operating on small scale with limited resources.
8. SMEs do not have immovable properties to offer as collateral against their financing needs.
9. Banks needs to develop their products considering such constraints of SMEs.
10. Pakistan’s Import Policy does not focus on providing better business opportunities to SMEs, as such Pakistani economy is based upon huge quantity of imported products/ mainly finished goods; SME business products cannot compete with the price and quality of these products.
11. SME business products cannot compete in prices, with the huge quantity of smuggled goods easily available in the market.
12. SMEs are mostly runs and managed with very low HR capacity that too with limited skills/ qualifications. With low capacity, book keeping of SMEs is problematic, which leaves their financial statements unclear/unreliable and impacts their credit worthiness.
13. SMEs with their limited financial resources, heavily rely on banks for their fund-raising needs.
14. Equity market is another source but very few SMEs are willing to float new equity, which hampers SMEs growth
15. SMEDA being the Government advisory body on SMEs, needs to be empowered to play its role for effectively growth of SMEs and to resolve their related issues.
16. One of the major obstacles in financing to SMEs is an Asymmetric of information, which prevents the institutional investors as well as individual investors from investing in SMEs.
17. Although, separate set of accounting standards have been established besides convenient set of legal frameworks for SME, but most of such efforts are like wonderful books lying idly in beautiful shelves. In order to boost financing for SME sector, we need to implement proper rules and regulations besides disclose of reliable information, which resolves investors reluctance towards SMEs.
18. There is dire need to adopt advance financial models for lending to SMEs so that entrepreneurs may have vast range of choices to get finance according to its business needs.
19. Lack of skilled labour is hurting SME industry. Products of SME industry cannot compete the quality of international products.
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
Website: http://www.unisame.org/
The post Issues of SME (ME and SE) Sector in Pakistan W.R.T Its Banking Needs by Nilofer Ahmed Member UNISAME council appeared first on Business News Pakistan.