ISLAMABAD, Dec 26: The government has decided to establish Small and Medium Enterprise (SME) Bank with an initial capital of one billion rupees to offer loans to small and medium enterprises.

“This new SME bank will be inaugurated on Jan I to arrange considerable loans for our small and medium enterprises in order to further strengthen pace of industrialization in the country,” said Minister for Finance Shaukat Aziz.

Talking to Dawn here on Wednesday, he said that Small Business Finance Corporation (SBFC) and Regional Development Finance Corporation (RDFC) were being merged into one organization to be called SME Bank.

He said that SME Bank would work like Micro Finance Bank and would be run by highly competent professionals, a number of whom had just been recruited from the private sector.

“We are making a powerful Board of the SME Bank so that it could function without any outside interference,” the Finance Minister said. He said the Board would be totally independent to take vital decisions to promote SMEs in all the four provinces.

“And after having streamlined on modern lines the SME Bank will be privatized,” Mr Aziz said, adding that the government would ensure that the new bank should offer loans to deserving small and medium enterprises.

The finance minister also said that from the first week of January 2002, he would start holding separate negotiations with the United States, Japan, Germany, France and South Korea for getting the issue of interest rate finalized on loans, rescheduled by the Paris Club recently.

The process of negotiations, he said, would have started by now had there been no Christmas and New Year holidays. These negotiations, he said, would have to be finalized by Sept 30 next year as per the decision of the creditors of the Paris Club.