KARACHI, May 29: The Union of Small and Medium Enterprises (Unisame) has invited the attention of the Finance Minister, Dr Hafeez Shaikh, to the issues of access to finance to small and medium enterprises.

In a statement, Unisame president Zulfikar Thaver urged the finance minister to ensure that finance is practically available to the sector at an affordable mark-up and on the basis of positive cash flows of the enterprises as permitted in the prudential regulations.

He further stated that SME retailers, wholesalers, distributors, importers, exporters, manufacturers, agriculturists and service providers all need finance and the banks insist on collateral in the shape of immovable properties and that too of selected urban areas only and ignore the directives of financing on positive cash flow basis to SME applicants.

The SMEs need bridge financing for transactions relating to import and export and distribution till such time the proceeds are realised, secondly they need finance for purchase of machinery, plant and equipment for balancing, modernisation and replacement (BMR) and thirdly they need project financing for setting up industries.

Though the State Bank of Pakistan, he said had announced several schemes for financing SMEs, banks are reluctant as SBP provides the finance but the risk in the financing is of banks and banks lack risk management abilities, and their risk management officers are not trained in risk management of the SME sector.

Mr Thaver further stated that the SBP had introduced Credit Guarantee Scheme (CGS) for SMEs to make banks comfortable in financing SMEs but banks are not subscribing wholeheartedly and SMEs remain without finance from banks.

He lamented that commercial banks are lending money to the government instead of financing the business, trade and industry and the SBP is silent on the subject though as a regulator it needs to emphasise and impose upon the banks to finance the SMEs.