The State Bank of Pakistan (SBP) has announced a new Refinance Scheme called “Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns”. This scheme aims at supporting businesses affected by the coronavirus pandemic to ensure availability of funds at their disposal for payment of wages/salaries to their workers and employees and avoid layoffs.
Below are the requirements, eligibility criteria and procedure for applying for refinance under this facility:
Eligibility criteria
- all business concerns are eligible EXCEPT Government Entities, Public Sector Enterprises (PSEs), Autonomous Bodies (ABs) and Financial Institutions.
- The funds can only be utilized to finance wages and salaries of permanent, contractual, daily wagers as well as outsourced employees. Other employee benefits i.e. bonuses, sales incentives, employee benefit plans, staff retirement benefits, gratuity etc. are NOT covered under this scheme.
- The companies availing financing are required to submit an undertaking stating that they will not lay off their workers/employees at least during three months from the date of first disbursement.
- The Refinance scheme covers wages and salaries of workers/employees of borrower for three months from April 2020 to June 2020.
- Most importantly refinance can also be availed for salaries pertaining to the month of April 2020 if already paid by company from its own sources.
- Wage bill will be determined through the latest available financial statements.
- The scheme can only be availed from one bank only.
Charges
| Charges Type | Applicable Rate |
| Markup Charges | 3% (For Filers) 5% (For Non-Filers) |
| Service Charges | No loan processing fee or credit limit fee |
| Pre-payment penalties | No prepayment penalties. |
Normal mark up rate will be applicable on overdue principal amount, as per the original repayment schedule.
Validity of the Scheme
This scheme is valid until June 30, 2020
Financing Limit
| Category | Wage Bill for 3 months | Loan Limit | Maximum Loan Limit |
| A | Less than or equal to Rs. 200 million | 100% of actual 3 months wage bill | Rs. 200 million |
| B | More than Rs. 200 million and less than or equal to Rs. 500 million | 75% of 3 months wage bill | Rs. 375 million |
| C | More than Rs. 500 million | Rs. 375 million or 50% of actual 3 months wage bill, whichever is higher | Rs. 500 million |
Processing Time
Application processing time is 15 working days from the date of receipt of complete information.
Disbursement of Loans
bank will disburse the salary / wage amount directly to the bank accounts/branchless banking accounts/mobile wallets of the workers and employees.
However, cash payment option is also available for employees who are not maintaining any bank account. Such workers / employees can open a bank account merely on an undertaking from the company.
Period of Financing and its Repayment
The Repayment of principal has been set at 8 equal quarterly installments. Moreover, payment of mark up is also on quarterly basis.
The repayment of principal amount will start from January 2021.
Collateral
According to the credit policy of the concerned bank and risk profile of the customer. In addition, corporate guarantee(s) of vendors/distributors are also acceptable.
Clean lending allowed up to Rs. 5 million for SMEs.
Rejection of the Application
If the application is rejected, the bank will share reasons for rejection with the customer as well as SBP.
Required documents:
The documents required for applying under this scheme are available at http://www.sbp.org.pk/smefd/circulars/2020/C6-Annex1.pdf
Thanks for the comprehensive overview of the scheme. Can you please write about other schemes of state bank.