Going small? Jordan to finance SME's
The proposed bank, Ensour added, would not accept deposits in order not to compete with commercial banks in the Kingdom.
According to the premier, the government aims at establishing a specialised bank such as the former Industrial Development Bank, which was sold to Arab investors few years ago and turned into an Islamic bank, to boost SMEs and the industrial sector.
Noting that in the past there was a specialised bank that offered cheap lending for housing purposes, he admitted that it was a government mistake at that time to amend its law and turn it into a commercial bank which is currently the Housing Bank for Trade and Finance.
“I apologise that I was part of the Cabinet that changed the bank’s law,” Ensour said.
Finance Minister Umayya Toukan elaborated that the government would be the largest shareholder in the proposed bank, indicating that international and regional financial institutions would be interested to enter as partners.
Planning and International Cooperation Minister Ibrahim Saif noted that the World Bank had extended a $70-million soft loan to Jordan earlier this year to finance SMEs, adding the funds are currently deposited at the Central Bank of Jordan.
He said that a total of $420 million are expected to be raised through loan agreements with international and regional financial organisations for the purpose of offering cheap lending to SMEs, which suffer from high interest rates and strict lending measures by local banks.
The proposed bank would offer easy lending conditions as well as long term loans that should carry affordable interest rates, Saif added.