COMMERCIAL BANKS URGED TO FINANCE UNDER WRF TO ALL SIZES OF ENTITIES

The Small Medium Industrial Leasing Estates Pvt Ltd (SMILE) has urged the commercial banks to promote Warehouse Receipt Financing (WRF) for entrepreneurs with weak balance sheets and yet remain fully secured under risk management by virtue of Collateral Management Agreement (CMA) and Stock Monitoring Agreement (SMA) with the collateral management companies.

The chief executive officer (CEO) of SMILE urged the commercial banks to study the features of the CMA and SMA and finance the SMEs under the agreements recognized and practiced the world over for the sector. The issues of collaterals and its management have been addressed methodically and the mechanism framed as per international mercantile laws to facilitate the importers, exporters and stockist of various goods.

The collateral management companies would shoulder the responsibilities of proper storing in satisfactory warehouses, monitoring, evaluating, looking after the fumigation and confirming the insured value and issuing receipts and withdrawals vouchers and keeping the creditor informed of the activities.

The collateral management companies are handling warehouses and managing inventories of all sizes of enterprises the world over and are successfully aiding the commercial banks in risk management he added.

Thaver appreciated the efforts of the State Bank of Pakistan (SBP) in this direction and welcomed their positive outlook and encouragement in the promotion of the concept for the benefit of the SME sector and making the banks comfortable in financing the sector.

He said it is very important for the banks to feel secured and comfortable and under the WRF well monitored under the CMA and SMA the issue of collateral would be resolved to the satisfaction of the entrepreneurs, the banks and the CMA and SMA agents.

He stated that this facility would open the door for growth for the sector and secured financing avenue for the banks to finance all sizes of entities.

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