Banks reject 91% of e-bike requests

Commercial banks have shown little enthusiasm for the prime minister's scheme to deliver subsidised electric bikes, approving only 4,075 applications, about 9% of those received, forcing the government to make major policy changes on Tuesday.

With such a low approval rate, the government is set to miss its annual target of distributing 116,000 electric bikes this fiscal year, despite charging a Rs2.5 climate support levy on every litre of petrol and diesel consumed in the country.

In light of the poor outcomes, the Economic Coordination Committee (ECC) of the cabinet approved changes to the Pakistan Accelerated Vehicle Electrification (PAVE) programme. The programme was launched with fanfare to incentivise the adoption of electric bikes, rickshaws and loaders through a targeted cost?sharing subsidy to partly offset the cost difference between electric and conventional vehicles.

The responsibility for promoting electric vehicles has been placed on the poor consumers of petrol and diesel, who pay Rs2.5 per litre – a levy that will double from July as part of a deal with the International Monetary Fund (IMF).The scheme is funded through a levy collected from conventional vehicles under the New Energy Vehicles Adoption Levy Act, 2025. The Finance Division allocated Rs9 billion for the programme for the current financial year. The government set a target of distributing 119,170 electric bikes and rickshaws this fiscal year.

Details show that despite a low target of 41,000 for the first phase, only 5,409 electric bikes have been distributed so far. Of these, banks approved 4,075 applications involving only Rs143 million in financing, the ECC was informed. Overall, 5,409 electric bikes and rickshaws have been approved, which is merely 4.5% of this fiscal year's target, which ends on June 30.

Applicants had been given two options: receive a subsidised bike through a bank on instalments, with the equity payment and entire interest covered by the federal government, or receive a direct subsidy into their account after providing proof of purchase and registrationon the PAVE digital portal, followed by third?party validationof the transaction.

Of 44,689 applications sent to banks, they processed 9,889 (22%), approving only 4,075. In contrast, out of 1,339 applicants who chose the self?finance option, 1,334 (99.6%) received electric bikes, and 1,033 (77.1%) received cost?sharing subsidies in their accounts.

Officials said the poor bank response necessitated major policy changes. For the second phase, the government had set a target of 76,000 subsidised electric bikes and 2,170 rickshaws and loaders. To minimise the banks' role, the self?financing scheme will be promoted. A new option will allow applicants to receive an electric vehicle from the supplier after paying the notified price less the applicable subsidy, avoiding full upfront payment.

The ECC also approved a self?finance scheme for government servants in BS?16 and below serving in federal government ministries, attached departments and subordinate offices. Under this scheme, the manufacturer will deliver the electric vehicle after receiving an upfront payment of Rs10,000 for a bike or Rs100,000 for a rickshaw or loader. The manufacturer will not charge interest or other costs, and the Engineering Development Board (EDB) will transfer the applicable subsidy within five working days. The government will pay the remaining price in instalments.

All applications received on the PAVE portal will be processed on a first?come, first?served basis. Fleet operators will be allowed to participate in the second phase to scale up adoption, with eligibility criteria determined by the steering committee.

However, there was discussion at a greater length about the third party verification of the applicants aimed at avoiding misuse of the facility.

The ECC was told that difficulties in hiring a third?party verification firm had undermined public confidence in the government's commitment.. For the second phase, about 600 electric bikes will be distributed to government college students who secured first, second or third position from each of the 26 Boards of Intermediate and Secondary Education (BISE) in the last Higher Secondary School Certificate (HSSC) examination in 2025, across four disciplines: pre?medical, pre?engineering, general science and humanities.

It was also decided that considering the recent geo-political developments and the need for energy security, an additional scheme under the PAVE programme for fast?track adoption of electric bikes, without creating extra foreign exchange requirements, was also proposed.

Under this component, 100,000 electric bikes will be rolled out within three months using 130,000 existing CKD kits available in Pakistan or on the high seas. This number will be in addition to this year's target of 116,000. A subsidy of Rs80,000 per bike will be provided to manufacturers from the Rs9 billion allocation through a transparent process linked to proof of delivery and registration. This component is expected to save 8.6 million litres of petrol, or about $8 million, in three months and $222 million over the next five years.