KARACHI, Feb 26: The State Bank of Pakistan (SBP) has convened the first meeting of the newly-constituted SME Credit Advisory Committee (SMECAC) at its head office on Thursday.

SBP Governor Dr Shamshad Akhtar, who has constituted this committee, will chair the meeting to review and finalise the proposed terms of reference (TORs) of SMECAC.

The committee will review the existing lending to small and medium enterprises (SMEs) and make suggestions for improving the flow of financing to SMEs.

The SME Credit Advisory Committee (SMECAC) is proposed to be established with Small and Medium Enterprises Department of State Bank of Pakistan functioning as its secretariat.

The objective of SMECAC would be to review the existing SME lending and to assess and calculate overall indicative lending targets as well as for individual commercial banks based on their performance in previous years, future business outlook and plans, the economic growth targets of the country, prevalent business conditions and SME financing requirements.The committee is also empowered to review existing regulatory and policy framework so as to propose suggestions/ recommendations for the promotion and development of SME finance in Pakistan.

The members of the SMECAC will meet on semi-annual basis under the following terms of reference:

i) review the current credit exposure of the commercial banks to the SMEs (cluster-wise and area-wise), SME financing issues and corrective measures;

ii) assess the overall credit requirements of SME sector;

iii) assist the National Credit Consultative Council (NCCC) in the annual credit plan by establishing the indicative SME lending targets for the commercial banks based on their previous performance, future outlook, economic growth targets of the country, prevalent business conditions and financing requirements of SMEs;

iv) suggest innovative approaches for improving disbursal and recovery of SME credit. Explore new lending models and techniques for financing to the SMEs and provide their suggestions and recommendations for banks to install and implement such mechanisms;

v) give feedback for installing the more evolved mechanisms in terms of SME designated/ SME-focused branches, trained SME staff and new cash-flow based SME ending techniques;

vi) provide suggestions on business enabling environment for banks vis-a-vis SME finance, that is, how banks can help SMEs to become bankable;

vii) put forward suggestions for strengthening the institutional framework for SME credit in the country;

viii) provide feedback on the efficacy of the regulatory environment vis-a-vis SME finance and suggest measures to improve the same;

ix) review the banks’ efforts for financial literacy of SMEs, especially through electronic and print media.—APP