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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Imperative for banks to support Omani SMEs with finance: CBO

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MUSCAT, NOV 23 - Small and medium enterprises (SMEs) in the Sultanate received less than their mandated minimum share of banking credit in 2018, the Central Bank of Oman (CBO) has lamented in a recent report, while reiterating the pivotal role that small businesses play as an engine of economic growth. Credit allocations to SMEs amounted to a mere three per cent of gross loans disbursed by banks, representing a “very small part of the lending of banks”, said the apex bank in its 2019 Financial Stability Report. This compares with a minimum five per cent of total credit that the Central Bank has obligated banks to extend to SMEs.


SMEs and start-ups have often blamed inadequate funding support for their woes – a contention that the government, along with the banking and financial services sector, have long been endeavouring to address. In its latest report, the CBO sought to remind commercial banks of the vital role that SMEs play in fuelling job creation and economic development. “SMEs not only form an effective conduit to provide employment, but these may also serve as the engine for economic growth. In the backdrop of a drive to create more job opportunities in the private sector, it is imperative that the banks fully support this segment,” it stressed.


The report also urged banks to pay particular attention to medium-size enterprises which “often tend to get less attention and financing” as opposed to small and micro enterprises, which “attract excessive focus”. Of a total of 5,454 Omani SMEs that were established in 2018, only 198 fell in the category of medium-size businesses, the remainder classified as small or micro enterprises, the Central Bank said. “Riyada (Public Authority for SME Development) and the banking sector should ensure that the medium-sized enterprises get their due share in policy focus and financing,” the CBO added.


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