PM’s Youth Business Loan Scheme fails to entice

People losing interest in scheme; stringent requirements partially a reason

ISLAMABAD:

The much-trumpeted Prime Minister’s ‘Youth Business Loan Scheme’ has been dormant for the last one year and has not been able to achieve its desired targets as slightly over 8,000 people have agreed to take concessionary loans worth Rs5.2 billion so far, revealed officials on Tuesday.

“People have lost interest in the scheme; we are receiving very few applications,” said National Bank of Pakistan (NBP) President Ahmad Iqbal Ashraf, while briefing the Senate Standing Committee on Finance and Revenue.

He said during first two ballots, as many as 10,442 people were declared eligible to obtain the loans but only 8,184 people or 79% of the total eligible persons accepted the loan offers. The actual beneficiaries, however, were only 6,126 who received the first tranche, totalling Rs5.2 billion.

“In some cases, people who received the first tranche were reluctant to accept the second tranche,” said NBP Senior Executive Vice President and Group Chief of Retail and Commercial Banking Mudassir Khan.

Reasons for decline

The figures are startling, as the government had hoped that tens of thousands of people would approach the state-owned bank for seeking concessionary loans. Prime Minister Nawaz Sharif had launched the scheme in December 2013 and the government had announced to give loans worth Rs100 billion to unemployed persons to start their businesses.

Read: Govt launches initiative to empower youth

Initially, people showed enthusiasm and as many as 60,062 people applied. However, the actual cases that were put for balloting stood at only 15,477, according to the NBP’s presentation. The province-wise breakup of applicants shows that as many as 45,470 people from Punjab applied for loans, followed by Khyber-Pakhtunkhwa 5,513, Sindh 5,320, and Baluchistan 1,372.

In terms of age, almost one-fourth were in the age group of 26-30, slightly over one-fifth were 21-25 years old while over one-tenth were in the age group of 41-45.

In terms of education, 37% were below matriculation level, 19% matric, over 22% intermediate, 14% graduate and only 7% were masters’ degree holders.

“On the question whether the PM Youth Loan programme remained successful or not, the jury is out,” said State Bank of Pakistan (SBP) Deputy Governor Saeed Ahmed.

Ahmed also criticised NBP’s approach of waiting for applicants and advised them to go after clients to make the scheme a success story. “The programme target was to disburse Rs100 billion but the government is far behind the target,” he said, admitting that it had rather reached a static point.

“Initially, the interest rate was 13% while the borrower had to pay only 8%,” said the NBP president, “Now the overall interest rate has come down to 11% with borrower’s obligation is 6%.

Ashraf said that the first ballot was held in May 2014, followed by the second one a month later. “Since June 2014 no balloting has taken place and the NBP has been waiting for a date from PM’s Office for holding the third ballot.”

Read: Maryam Nawaz resigns as PM's youth loan programme chairperson

“Six thousand more applications can be put for it, “he added.

He further informed that initially the government had planned to give half the loans to women but a lack of interest from their side meant the condition was relaxed. Women were excluded from the balloting process and anyone who applied for the loan got it.

“People were hesitant to accept the offer due to stringent requirements of equity and guarantors,” he explained.

In order to make the programme a success story, the NBP now plans to re-launch the scheme along with an aggressive print and electronic media campaign besides partnering with the private sector.

Number of applicants from across the country

Punjab 45,470
K-P 5,513
Sindh 5,320
Balochistan 1,372

Published in The Express Tribune, August 19^th, 2015.

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