ISLAMABAD, Oct 24: Newly-established SME Commercial Bank in the public sector will start lending operations exclusively for small and medium enterprises from January next.

“This is the first ever commercial banking institution for lending to the SME sector, major segment of the economy with Rs1 billion paid-up capital”, chief of the institution, Kaiser H Naseem said here on Wednesday.

The SME Bank has already applied for registration to the Securities and Exchange Commission of Pakistan, which is being processed at swift pace, he added.

Merger of Small Business Finance Corporation (SBFC) and Regional Development Finance Corporation (RDFC) has created the SME Commercial Bank, which will also mobilize private deposits like other commercial banks.

Kaiser said this was a historic event that two public sector financial institutions had been merged into one entity, which would now function as commercial bank to serve the interests of small and medium enterprises sector.

The SME Commercial Bank has been set up to develop SME sector, which is posting 45 per cent direct contribution to the GDP and over 50 per cent to the country’s export earning. Around 80 per cent labour force of the manufacturing sector is in the small and medium enterprises. An ordinance for the setting up of SME Bank has recently been promulgated. Senior bankers are being appointed in this new banking institution on merit and competence with an experience of SME sector.

To a question SME Bank chief said that certain conditions were indispensable for the mobilization of deposits including conducive environment, business support services and access to funding.

He was of the opinion that credit enhancement facility was must for the small and medium enterprises, adding present lending policy for SME sector will continue.

Kaiser said that far flung and backward parts would also be provided lending facility according to their needs.

International financial institutions are also keen to work with this institution in developing and promoting SME sector, he added.—APP