The central bank would follow the directives issued by the Supreme Court regarding loans write-off, said Shahid H Kardar, Governor, State Bank of Pakistan on Tuesday. The Supreme Court had directed the SBP to publish its suggestions regarding the constitution of a commission for examining the cases pertaining to persons who got their bank loans written off in the print media.
Talking to newsmen at a conference on “SME banking in Pakistan: Global/local trends and role of value-added services” jointly organised by the SBP and International Finance Corporation (IFC), he said that the central bank could not identify the loans waived under political influence. “This could be done by the board of directors of banks,” he added. The State Bank provides protection to the accountholders and none of the depositors had lost their savings, he said.
Earlier, in his keynote address at the conference, Kardar said, at present, the financial industry lacks relevant skills to evaluate small and medium enterprises (SMEs) on non-traditional parameters that are reflected in the lack of innovation in the financial products to address the financing needs of the sector. Kardar expressed concerns over decline in the banks’ lending to SMEs during the last three years.
He said the bank credit to SMEs declined from Rs437 billion in 2007 to Rs334 billion in December 2010, showing a significant decline in real terms at a time when input prices had increased sharply, pushing up the demand for working capital credit.
He said that the future of banking industry in Pakistan is dependant on the strength and performance of the economy in which the SME sector had attained a crucial role in terms of its growth potential and greater employment opportunities. The SBP governor emphasised upon the significance of the SME sector and said that it could not be ignored.
“Most particularly and especially when you consider that almost 99 percent of all business establishments are services, providing employment to 77 percent of the non-agro workforce and contributing 30 percent to the GDP, no one can deny a key role of this sector in the overall economy,” he added.
The SBP is trying to develop financial institutions to support the SME sector growth.
“We issued specific prudential regulations in 2003 to facilitate banks in financing SMEs in an effective and prudent manner and more recently credit guarantee schemes were launched and now the SBP is conducting cluster surveys on SMEs in collaboration with IFC and LUMS,” he added.
The new communications technology has also brought new areas, such as services (computer software, consultancy), into the framework, he said. Earlier, services were not tradable across time and space. Now, they can be exported via the internet and even stored electronically and used for a long time after they have been produced, he added.
Now that services are tradable they can be included as a component in the comparative advantage of developing countries, exports of labour-intensive services (typing, programming, call centres, etc),” said Kardar.
“Computers can be used to automate low productivity tasks previously performed by office secretaries. The tradability of services across space, the reduced attraction of large markets and shrinking importance of economies of scale are all combining to provide developing countries the opportunity to sell their labour-intensive services and manufactures,” he added.
Kardar said that the existence of global commodity chains either producer-driven (capital and technology-intensive products) or buyer-driven (design and marketing-intensive for products such as textiles and leather) have left industrial enterprises with no other choice, but to become part of these chains, to be able to access markets.
He said that Pakistani manufacturing units, even those small-sized, had also realised that they could not operate in isolation any more. “However, to be accepted as a part of these production and trade networks, individual enterprises have to meet standards of the buyers with respect to price, quality and delivery schedules,” he added.
0 comments:
Post a Comment