ISLAMABAD: Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan has criticized banks for their failure to extend loans under the Rs2.2 trillion Small and Medium Enterprises (SME) fund. According to Union of Small and Medium Enterprises, during a consultative session, Khan urged regulators, including the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP), to support small loans, leasing, and insurance for SMEs.

The session, attended by SME representatives, business clusters, banks, SBP, and government departments, aimed to address challenges in accessing affordable financing. The meeting noted Prime Minister Shehbaz Sharif's directive to increase total SME financing from Rs1.1 trillion to Rs2.2 trillion by 2028, calling for simplified lending procedures and improved coordination with business clusters.

Mr. Khan highlighted the need to bridge the gap between financial institutions and businesses by addressing practical obstacles. SME representatives pointed out financial and procedural hurdles, stressing difficulties in obtaining credit and financing for business expansion and operational needs.

Emphasizing the economic role of SMEs, Khan noted their contribution to GDP, exports, and employment, while acknowledging limited access to finance as a growth constraint. Participants urged banks and the SBP to support SMEs, ensuring effective follow-up and accountability.

The session underscored the importance of financial support reaching grassroots businesses, translating into improvements in production, investment, and employment. Concerns were raised about the lack of standardized loan application processes, with banks encouraged to enhance borrower assessments through cash flow analysis and alternative collateral arrangements.