Investor Presentaiton
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Chapter VIII - MSMEs - Revitalizing Punjab's Economy
State Bank of Pakistan has cut the policy rate to 7 percent. SBP has also provided various incentives to manufacturing sector and
exporters. State Bank of Pakistan has introduced a refinance scheme to avoid layoffs of employees by businesses particularly the SMEs. The
scheme essentially is Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns.
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In addition to the recently introduced SBP's refinance scheme, SBP has many other targeted schemes which have the potential to
support the vulnerable segments of MSMEs but are deficient in terms of their outreach hence off take. Punjab Small Industries Corporation
(PSIC), which is the lead agency of Government of the Punjab to support growth and sustainability of small industries in the Province, is
exploring the possibility of joining hands with SBP to market these schemes through its network of branches and field offices spread
throughout the Province.
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Although SBP's refinance scheme has the potential to address the cashflow problems of smaller businesses which are already in
banking and taxation network; one area that needs to be addressed is the collateral/guarantee requirements to access the credit, especially
for the large proportion of MSMEs which are out of the tax net. For such businesses, there has been felt a need that these loans should be
subsidized and backed by Government's credit loss guarantee and Punjab Government has accordingly responded by introducing a scheme,
to be executed by PSIC, for this segment within MSMEs, which is discussed under subsequent pillar of the strategic response.
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Punjab Rozgar-A Flagship Intervention for MSMEs Support and Other Measures: Flagship intervention by Punjab
Government to support MSMEs entitled "Punjab Rozgar" has been designed and approved in principle. Punjab's Post
Covid-19 public investment strategy stipulated in RISE Punjab ADP prioritisation framework mandates that projects
should meaningfully contribute towards supporting MSMEs to sustain and re-orient under the new normal. Punjab
Rozgar shall be implemented by Punjab Small Industries Corporation (PSIC) in FY 2020-21 in partnership with the Bank
of Punjab (BOP) to provide financing support to MSMEs through three channels - entrepreneurship development, Credit
Guarantee Support and Loan Markup Support. Punjab Rozgar has been designed to make it more conducive, effective
and useful for MSMEs in the current economic slowdown. Salient contours of the facility are:
Preference
Loan Limit
Secure Lending
PSIC's Network
For All
Low Cost Funds
Preference to existing
MSMEs businesses but
startups will have the
facility to avail the
facility as well
Loan limit up to Rs. 5
Million
Options for both clean
and secured lending
whereby the magnitude
of lending would vary
Network of PSIC's
regional offices to be
used for maximum
outreach, marketing
and businesses
facilitation in the entire
loan lifecycle
Preferential debt-to-
equity ratio for women,
disabled and
transgenders
Low cost of funds to be
charged from the
borrowers
PSIC has also launched a scheme for financial support to cottage industry and cluster development in select districts of Punjab. This facility is
also being provided through mobile app named "Dastak" and is geared towards the MSME sectors which are affected by the COVID-19
slowdown. MSMEs can avail the facility for requirements for Working Capital, Raw Material, Purchase of Machineries, Tools,
Equipment's and Establishment of New Projects up to PKR 0.3 Million for a period of 03 years.
Chief Minister's Self-Employment Scheme (CMSES) has been active since 2011 through Akhuwat Islamic Microfinance as service provider.
More than 2.9 Million borrowers have so far benefitted from it with total interest-free loans disbursed to the tune of PKR 72 Billion. Some more
interventions provide targeted credit facilities for artisans and handicrafts development and support to skilled, semi-skilled and home-based
workers. These schemes primarily aim at addressing challenges of liquidly needs & employment generation of micro businesses at 0% mark-
up.
In conjunction with MSMEs support, skill development for industrial workers and employees has remained a key area of focus under Punjab
Growth Strategy and now under RISE Punjab as well. Technical and vocational training opportunities not only provide skilled manpower to
micro- to large-scale industries but shall help the labour force develop its capacity to establish their own small businesses to seek better
employment opportunities. TEVTA has been the lead agency of the Government of Punjab in this regard. One of its flagship programs named
"HUNARMAND NAUJWAN" is aimed at producing 94,700 trained graduates within a time span of 12-months. It is anticipated that the human
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