SBP bails out the businesses to get loan amid the pandemic
KARACHI, 10th April: The State Bank of Pakistan (SBP) has introduced a temporary scheme for the businesses in Pakistan to get a loan from them.
According to reports of Baaghi TV, keeping in view the deteriorating situation of the businesses due to COVID-19 in the country, the State Bank of Pakistan has offered the people to get loans from them, rather than laying off their employees.
The details of the new scheme, called ‘Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns’ was issued in two circulars by the SBP’s Infrastructure, Housing and SME Housing department to presidents of all banks and Islamic finance institutions.
SBP introduced new refinance scheme to avoid layoff of workers
The scheme is available to all the businesses in Pakistan, to provide an incentive for keeping their employees and giving out their salaries on time. This scheme is available through all banks and covers all the employees including permanent, contractual, daily wagers and out-sourced workers.
The bank scheme will provide the wages of the employees for three months from April to June 2020 to only those businesses who do not lay off their workers at the time when the country is under lockdown.
The mark-up on the loans under this scheme will be up to 5pc. Borrowers that are on the active taxpayer’s list will be able to get loans at a further reduced mark-up rate of 4pc.
Businesses with a three-month wage and salary expense of up to Rs200 million can avail the full amount in financing; those with a three-month wage and salary expense greater than Rs200 million and less than Rs500 million can avail up to 75pc; while those with a three-month wage and salary expense greater than Rs500 million can avail up to 50pc.
The SBP indicated that this scheme will cater to the smaller businesses preferably and banks will not charge any loan processing fee, credit limit fee or prepayment penalties for loans under this scheme.
Additionally, the grace period for the borrowers will be of six months and the principal amount will be payable in two years period.
Banks will have to report weekly to the SBP on the scheme, including the reasoning behind any denial of financing requests.
“One of the main benefits of the scheme is that employers that retain workers on their payroll will be able to restore or increase production quickly once the situation normalizes,” the central bank said. “The scheme will ease the liquidity constraints of the businesses and they can use their available financial resources to meet other working capital requirements.”
The State Bank of Pakistan has taken very healthy steps to handle the economic impact of COVID-19 in the country. Not only did it announce the Temporary Economic Relief Facility (TERF) for supporting new investment in the country on the 17th of March, but has also announced relaxation in credit financing for exporters and importers on March 24.
SBP has also announced a relief package for borrowers and has allowed hospitals to make advance payments for medical equipment and medicines related to COVID-19 in the month of April.
Baaghi TV urges the citizens to play their part in lending a helping hand to the society at this time of the pandemic.
Stay safe and stay tuned to Baaghi TV for more updates!
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