It is a dream that the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) have been dreaming for a long time: getting more credit flowing to small and medium-sized businesses, the backbone of any economy, including that of Pakistan. And with the rise of fintech platforms, the dream feels tantalizingly close to reality.
The problem is that while technology can and does supply solutions to at least some of the bottlenecks that constrict the flow of credit to small and medium-sized businesses (SMEs), there would still be one that would trump them all: the Federal Board of Revenue (FBR), or more specifically, the approach of the federal government to setting tax policy.
Getting credit policy for SMEs – whether it be for a financial institution or a regulatory body – in any country not named the United States is incredibly difficult. And the State Bank in particular has been trying to balance the need to encourage this important avenue of credit while at the same time trying to manage the level of risk it would introduce to the banks’ balance sheets.
So what does it take to make it work? And is fintech really the key to helping unlock credit to SMEs in Pakistan? Possibly, but before diving into all of that, let us take a look at where things stand now. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
