According to a statement issued by State Bank of Pakistan (SBP), until 15 May 2020, around 1700 businesses have applied for loan under the SBP’s Rozgar Refinance Scheme amounting to Rs. 120 billion. These businesses have employed more than 1.1 million individuals. Under this scheme, about Rs. 61 billion has already been approved by banks which represents around 600,000 jobs. The loan under this facility has enabled companies to pay the wages / salaries to its employees thus savings jobs. Whereas the remaining cases amounting to Rs. 59 billion are under process at respective commercial banks.
The other measures taken by SBP have also received good response from businesses and general public. As on May 15, 2020, an amount of Rs. 432 billion of principal repayments of various loans have been deferred as part of the principal deferment scheme introduced by SBP in collaboration with the Pakistan Banks Association (PBA). Similarly, loan & advances amounting to Rs 59 billion have been restructured / rescheduled. Majority of the beneficiaries in the loan deferment / restructuring are microfinance borrowers. Moreover, around 100,000 requests for deferment and restructuring / rescheduling are under process at banks.
The SBP had announced a new Refinance Scheme called “Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns” on April 10, 2020 with an aims to support businesses affected by the COVID-19 pandemic to ensure availability of funds at their disposal for payment of wages/salaries to their workers and employees and avoid layoffs. Under this scheme, businesses can avail loans on concessional rates from their commercial banks with a commitment to not lay off workers for 3 months. Know more about the SBP Rozgar Refinance Scheme.
It was observed that the SMEs were finding difficulties in arranging adequate collateral to avail this facility and banks were hesitant to take exposure in lending under this refinance scheme. Therefore, the Ministry of Finance stepped in to shoulder risk sharing with banks and allocated an amount of Rs 30 billion under a credit risk sharing facility for the banks to share the burden of losses due to any bad loans in future. Under this risk sharing arrangement, the Government will bear 40% first loss on principal portion of disbursed loan portfolio of the banks. This facility will incentivize banks to extend loans to collateral deficient SMEs and small businesses to avail financing under SBP refinance scheme.
Similarly, soon after SBP enhanced the refinance limits up to 100% of wages /salaries of businesses with average 3 month wage bill of up to Rs 500 million. For businesses with 3 month wage bill exceeding Rs. 500 million, refinance limit was enhanced up to 75% with a maximum financing of Rs. 1 billion.
