UNISAME URGES ENHANCEMENT OF LIMIT OF MICRO FINANCE BANKS

The Union of Small and Medium Enterprises (UNISAME) urged all financing institutions to refrain from using the word poor for the micro sector and instead use the internationally approved word “under privileged” for the micro sector. The micro entrepreneurs being business persons involved in commercial activity however small dislike the word poor and consider it improper.

President UNISAME Zulfikar Thaver said the definition of a poor person in financial circles is one whose income is not taxable but it is pertinent to note that 90% of the people have come under the tax net due to cellular facilities used by them. He requested the concerned not to make this an issue as micro sector is facilitated by digital banking and is paying taxes. It should not be referred all the time as the disorganized sector. The Federal Board of Revenue (FBR) is in a position to know what each CNIC holder is paying as tax.

Thaver as chairman of working group of Capacity Building under the National Financial Inclusion Strategy (NFIS) said in the forthcoming 10th Micro finance Conference organized by Shamrock Conferences to be held on 4th October 2016 at a local hotel would urge the State Bank of Pakistan (SBP) to raise the limit of financing of micro finance banks to Rs 1 million to enable the micro finance banks to finance the small entrepreneurs as well as commercial banks are financing the medium sector but not the small who are left without the facilities of finance.

He added that the mark up rate must be on declining basis and not flat rate to lessen the burden on micro entrepreneurs who can ill afford to pay such high rates. If the micro finance banks increase their productivity and portfolio at risk by risk management and verification efficiency it will increase their profitability. He also urged the micro finance banks to accept social collateral and guarantees of trade and cottage associations. There is need to finance the start ups and although much talked about this facility of seed money for new entrants is missing.

He said he appreciated the concept of Micro Small Medium Enterprises (MSME) banks and said it would include the SMEs in the micro finance system but it is important that the limit is increased to 1 million without caps to enable the small to avail the facilities.

He said it is pertinent to note that digital financing has made life easy for the micro sector and Pakistan is leading in Asia in digital financing.
Nevertheless there is scope for micro finance banks and their footprints are seen in urban and rural areas and are financing the bottom line of the pyramid which is the majority sector and deserves the best attention of the policy makers.

UNISAME experts in micro financing will advocate the cause of the micro sector from the hawker to the cottage industries and also home based units run by women. They need finance at affordable mark up on pay as you earn schemes with dignity and respect which is the theme of the NFIS to ensure that every segment is included in access to finance.

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