National Bank of Pakistan has signed a Memorandum of Understanding (MoU) with Ghandhara Industries Limited (GIL) for Prime Minister Youth Business Loans Scheme (PMYBL) at NBP Head office, here on Monday.

Under the arrangement, GIL and NBP have agreed to focus on development of small businesses for the educated and unemployed youth. The applicant will procure commercial vehicles offered by GIL to facilitate his/her business activities and NBP will assist in financing the asset under the PMYBL Scheme. The MoU between both organizations will assist applicants to develop their existing or new business set-up.

The representatives of National Bank at the signing ceremony were Mudassir H Khan SEVP & Group Chief, Commercial & Retail Banking Group (CRBG), S H Irtiza Kazmi EVP & Coordinator PMYBL, CRBG and Ms. Nageen Rizvi VP & Unit Head Marketing & Promotions PMYBL, CRBG. Ghandhara was represented by Ahmed Kuli Khan Khattak CEO, Iftikhar A Khan CFO & Company Secretary, former Lt. Gen Ali Kuli Khan Khattak Director, Muazzam Pervaiz Khan Executive Director, Pervaiz Iftikhar Group Executive Director Finance and Imran Rashied G M Marketing.

Mudassir Khan said small businesses are vital for sustainable economic development for Pakistan and for us to survive and exceed today's globalised world. As the developing nations compete for greater market share globally, Pakistan must not to lag behind.

He said as per SMEDA study, SMEs constitute 90 percent of enterprises in Pakistan; employ 80 percent of the non-agriculture labour force and their share in the GDP is 40 percent. Pakistan has one of the highest SME start-up rates in the world, ie, approximately 8.5 percent. However, it also has one of the sharpest decline rates with around 50 percent of the start-up SMEs losing customers and closing down within 5 years of establishment.

"PMYBL is the most significant initiative taken by the federal government for the development of SMEs and engaging the commercial banks to arrange the much needed financial assistance for them. It was felt that the survival of SMEs was mainly hampered by non-availability of credit facilities," he added.

Irtiza Kazmi, Coordinator for PMYBL said a known feature of SME sector is its ability to create multiple job opportunities. Pakistan faces a major challenge in the form of unemployment as its labour supply continues to grow rapidly with not enough matching employment opportunities, he added.

On the other hand, owing to limited capital availability for business and that too at exorbitant markup rates, improving financial access for SMEs is expected to bring many benefits, including enhancing production quality, increasing new business opportunities, creating more jobs, reducing poverty, stimulating investment and mobilizing savings. All of this leads to sustainable economic development of the country in general and prosperity for the masses in particular, Kazmi said.

He said all commercial banks have the mandate to provide credit to SMEs and they have their special schemes in place for this purpose. Nonetheless, SMEs are generally found to have little or no access to institutional credit. This is particularly true of small businesses which historically cannot even approach banks for credit facilities for fear of rejection and cumbersome requirements.

"NBP being the largest public sector bank has always led the way in penetrating the hitherto neglected market segments. While sharing the commitment of the government towards uplifting the youth and providing them opportunities of financial independence through self-employment, NBP has yet again taken the lead through the PMYBL scheme," he added.

Ms. Nageen Rizvi said National Bank is making inexorable efforts to develop the impoverished sector for the unemployed youth of Pakistan is the core component of the bank's integrated community strategy.

National Bank is fortified with the alliance of GIL as a partner into the PMYBL Scheme. Both partners believe that this association will go a long way in bringing a dynamic change in the small business sector and will provide further opportunities to the prospective unemployed youth, she added.