SBP raises financing limits under Rozgar Scheme

Many changes made to ensure benefit reaches SMEs

KARACHI: The State Bank of Pakistan (SBP) has enhanced financing limits on its Refinance Scheme to Support Employment and Prevent Layoff of Workers.

“The SBP has been constantly receiving feedback from various stakeholders to make the scheme more facilitative for businesses and offer incentives to prevent the layoff of employees under the current Covid-19 pandemic,” the central bank said in a statement on Monday.

“Many of the changes in the scheme have been made to ensure that the benefit reaches small and medium enterprises (SMEs) that offer employment to a large number of people.”

In this regard, the recently announced government’s risk-sharing facility and permission for corporate guarantees as collateral are expected to incentivise banks to extend loans to the collateral-deficient SMEs, it pointed out.

Now, taking another step further to facilitate middle and large businesses, which employ a large number of people, and to ensure payment of wages and salaries under the scheme, the SBP has decided to enhance its refinance limits announced earlier.

Finance ministry accuses SBP of causing Rs6.5b loss to kitty

The State Bank will now finance up to 100% of wages and salaries of businesses with an average three-month wage bill of up to Rs500 million. This can be used for onward payment of wages and salaries for April, May and June 2020. Earlier, 100% financing was available for wage bill of up to Rs200 million only, the SBP said.

“Similarly, for businesses with three-month wage bill exceeding Rs500 million, the State Bank will now finance up to 75% with maximum financing of Rs1 billion,” it said. “Earlier, 75% financing was available up to a maximum of Rs375 million and 50% up to a maximum of Rs500 million.”

These changes are applicable with immediate effect, however, businesses which had earlier availed lower financing due to applicable limits can now get additional financing on the basis of revised criteria. The central bank was of the view that the increase in financing limits will enable the full array of businesses to benefit from the SBP’s Rozgar Scheme.

Published in The Express Tribune, May 12^th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.