FRIA asks banks to ensure lending to priority sectors’ SMEs to stimulate growth

Author: News Desk

The Ferozepur Road Industrial Association (FRIA) has asked the banks for lending to priority manufacturing sectors of SMEs to stimulate economic growth and development in the country.

The FRIA senior vice chairman Shahbaz Aslam said that we need to set our primary agenda to strategize and enhance financing and lending to priority sectors to stimulate economic growth and development in Pakistan.

He pointed out the government’s ongoing efforts to promote economic stability, fiscal discipline, and sustainable growth.

He emphasized the critical role of the banking sector in supporting the government’s development agenda and urged the banks to increase financing and lending to priority sectors, namely agriculture and Small and Medium-sized Enterprises (SMEs). He requested the Pakistan Banks to lead a task force comprising representatives from the banking sector, government, and relevant stakeholders, with the primary objective to accelerate financing in the priority sectors and devise actionable strategies to overcome the existing challenges and bottlenecks hindering the growth of these vital sectors. Shahbaz Aslam reiterated the FRIA’s commitment to working closely with the banking sector to address the financing needs of priority sectors and ensure the effective implementation of the proposed strategies and initiatives.

He highlighted the SBP’s role in providing regulatory support, policy guidance and financial incentives to encourage banks to expand their financing activities in alignment with the government’s priorities. He said that despite the significant importance, over 5 million SMEs have been facing a huge credit gap, receiving only 7 percent of private sector credit, far below than neighboring countries like Bangladesh (25 percent) and India (18 percent), with the State Bank committing to increase SME credit share to 17 percent by 2023. To achieve this, we must advocate for targeted and fixed SME allocations in concessional financing schemes, particularly those aimed at the export-oriented sector.