KARACHI, Sept 21: The Equity Participation Fund (EPF) has removed geographical restriction for financing small and medium enterprises. After amending its rules and regulations the EPF will now be in a position to finance projects all over country.

Under previous arrangement the EPF was not financing projects in urban areas of the country on a plea that the major cities like Karachi, Lahore, etc., are already under tremendous population pressure and are over-crowded.

However, the Union of Small and Medium Enterprises (Unisame) took up the matter with EPF and put forward their argument that such institutions should not be inhibited from investment as it restricts employment opportunities which the country badly needed.

Consequently, the EPF has amended its rules and regulations allowing financing to all over the country for participating in equity for setting up new and existing industrial projects and working capital.

Incorporated under the Equity Participation Fund Ordinance, 1970, the Fund has been functioning for the last over three decades. The EPF does not finance on mark up basis but on participatory dividend.

On a demand raised by the Unisame the EPF has also enhanced its financing facility from Rs6 million to Rs15 million and reduced guaranteed dividend from 8 per cent to 7 per cent per annum. This is another achievement of the SMEs, which need financing at cheaper rates.

President Unisame Zulfikar Thaver told Dawn it was an excellent development that an institution like EPF has removed restrictions and also lowered its guaranteed dividend from 8 to 7 per cent per annum. However, he said that now it was up to the SMEs to come forward and avail this opportunity.

Nevertheless, he said, there was urgent need for arranging a set-up, which could guide and ensure viable projects for the SMEs that could not afford to lose a single penny and become sick or defaulter.

Despite the fact that the world over the SMEs had been at the bottom line of defaulting entities but yet there was a need for a proper institution which could take care of them and give them proper guidelines, he added.

Responding to a question, Mr Thaver said undoubtedly the Unisame could play this role but it does not have proper resources and there was urgent need for strong patronage from the government side. He said SMEs need market guidance and proper human skills to grow and become strong industrial base.