The State Bank of Pakistan (SBP) has extended the Rozgar Scheme for another three months to provide economic support to businesses and households.
According to a statement issued on Tuesday, the central bank has also increased the risk coverage for small and medium enterprises (SMEs) under the strategy in collaboration with the government of Pakistan.
“This scheme provides concessional loans to businesses for wages and salaries’ expenses provided that they commit not to lay off their employees for the period of the loan,” the central bank said. “The SBP has decided to extend the validity of this scheme by another three months till the end of September 2020.”
According to the central bank, businesses will now be able to obtain financing to pay wages and salaries for a maximum period of six months starting from April 2020 to September 2020.
Effectively, this suggests that businesses can not only obtain loans to fund their wage and salary bills up to a period of three months (from July to September 2020) but can also get reimbursement for the wages and salaries paid during the April-June 2020 period.
With regard to those businesses which have already availed the scheme, financing limits for July-September 2020 will be calculated on the same basis on which April-June 2020 limits were calculated.
Under the scheme, total financing of Rs112.8 billion had been approved till June 19, 2020 for 1,653 businesses covering wages and salaries of over 1.1 million employees.
With a view to incentivising banks and development finance institutions (DFIs) to provide financing to SMEs and non-SME corporates, the government of Pakistan introduced a risk-sharing facility for the Rozgar Scheme.
“Under this facility, the government has promised to bear 40% of first loss on the disbursed portfolio (principal portion only) for the eligible borrowers,” it said. “The government has now decided to extend the validity of the risk-sharing facility for another three months for the SMEs and small corporates with turnover of up to Rs2 billion.”
It also enhanced the risk coverage for the SMEs from 40% to 60% of first loss on a portfolio basis, the release said.
Published in The Express Tribune, July 1st, 2020.
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