Islamabad: The Ministry of Finance and the State Bank of Pakistan (SBP) on Wednesday jointly launched a risk-sharing mechanism that will allow the country’s banks to avail SBP’s Refinance Scheme to Support Employment, according to news sources. In this regard, the banks that are eligible for this scheme are those that choose to lend to Small and Medium-scale Enterprises (SMEs).
SBPs Refinance Scheme to Support Employment and Prevent Layoff of Workers will assist the SMEs that are facing problems in arranging acceptable collateral to receive loans, as banks are hesitant to take on additional risk in these trying times.
As per the official statement issued by the SBP, the government has set aside PKR 30 billion for this credit risk-sharing facility for the banks — with the scheme to be exercised over a span of four years to assist with the burden of losses incurred owing to bad loans. Under this facility, the government will share 40% of the first loss on the principal portion of the loans disbursed by the lending banks. The SBP has further announced that banks are not allowed to demand additional collateral over and above 60% of the principal amount and mark-up.
Due to the impact of coronavirus, the SBP’s Refinance Scheme to Support Employment and Prevent Layoff of Workers will only be applicable for businesses that resolve to not lay off workers over the coming three months — as they can avail credit from banks to pay three-months worth of wages at a concessional mark-up rate.
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