Disbursements under PM Youth Loan Scheme: NBP president advises government to be patient

Says stringent procedures are taking time, it must lend ‘correctly and professionally’

ISLAMABAD: The National Bank of Pakistan president has advised the government to show patience over the slow progress of the Prime Minister’s Youth Business Loan (PMYBL) Scheme, saying that throwing away money should not be a criterion for its success.

NBP President Syed Iqbal Ashraf’s comments came days after Prime Minister Nawaz Sharif expressed dissatisfaction over disbursements made under the flagship PM’s Youth Business Loan scheme. Ashraf was speaking during a meeting of the National Assembly Standing Committee on Finance.



“We are also frustrated over the slow progress of the loan scheme…we have asked them to be patient,” said the President while responding to a question.

He said throwing money was not a criterion of success, as the bank had to lend “very correctly and professionally.’

“There is a wish list and some of it we cannot meet,” he added.

The president, however, maintained that the PM wanted loans to be disbursed without any political influence. “Stringent procedures are taking more time.”

PM Sharif visited the NBP headquarters in Karachi last Friday to review progress on his flagship programme.

“The Prime Minister has expressed his dissatisfaction over the pace of disbursements to prospective clients under the PMYBL in general and denial in credit to the applicants in particular,” said a PM Office handout.

Prime Minister Nawaz Sharif launched the scheme in December 2013 with an aim to provide loans ranging from Rs500,000 to Rs2 million, requiring funds worth Rs100-200 billion, aimed at providing jobs to the youth.

Ashraf informed the committee that so far Rs7.7 billion had been disbursed among 8,139 clients. “The disbursement figure is expected to jump to Rs17 billion as the bank is in the process of giving loans to a total of 13,500 borrowers by the end of this year.”

Ashraf further informed the panel that within six months of the announcement of the scheme, the bank received 60,000 applications. “Now about 100 to 200 people are applying every quarter, which shows a lack in interest.”

As many as 62,974 people have so far applied for the scheme.

Ashraf said over 41,000 applications had been turned down due to various reasons; many people applied for loans despite having no work experience.



The Prime Minister has ordered the State Bank of Pakistan (SBP) to investigate the high rate of rejection of applications, added the PM Office handout. “The huge number of rejections need to be justified; we need to encourage youth instead of frustrating them,” said the Prime Minister last week.

In September last year, the Premier had directed the NBP President to clear the entire backlog within two months. However, even after almost a year, out of 15,781 approved cases, as many as 7,642 or 48.4% cases are still pending for disbursements, according to the NBP presentation.

The NBP president gave hope that the situation would turn around in the next four months.

Out of the disbursed amount so far; three-fourths of it went to people belonging to Punjab. Applicants with K-P domicile have got 12%, Sindh 7%, Islamabad 2%, Azad Kashmir 2%, Balochistan 2% while Gilgit Baltistan residents got 1% of the disbursed loans, as per the NBP presentation to the committee.

Rashid Godil of the MQM questioned the low volume of disbursement in comparison with the amount the government had spent on advertising the scheme.

Moreover, the NBP president also briefed the committee about the bank’s performance. “NBP is the largest lender to the government and has lent Rs275 billion to the public sector enterprises out of which, Rs220 billion are given against sovereign guarantees,” he said.

Responding to a question, he said the decision to lend money to Pakistan Steel Mills (PSM) and Pakistan International Airlines (PIA) was taken by the government and the bank simply implemented it.

NBP’s non-performing loans have risen to Rs120 billion and the bank has shared a plan with the SBP to recover Rs60 billion NPLs by 2018.

Published in The Express Tribune, August 25^th, 2016.

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