State Bank of Pakistan, SBP has introduced new refinance scheme to avoid layoff of workers, in face of the current economic situation of businesses in the country due Corona virus
According to Press release by State Bank:
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According to Press release by State Bank:
To support the employment of workers in the face of economic
challenges posed by the spread of COVID-19, the State Bank of Pakistan (SBP),
has introduced a temporary refinance scheme for businesses entitled Refinance
Scheme for Payment of Wages and Salaries to the Workers and Employees of
Business Concerns. The core objective of this facility is to incentivize
businesses to not lay off their workers during COVID-19 Pandemic.
The scheme will be available to all businesses in Pakistan
through banks and will cover all types of employees including permanent,
contractual, daily wages as well as outsourced workers. The scheme will provide
financing for wages and salaries expense for three months from April to June
2020 for those businesses which do not layoff their employees for these three
months.
The mark-up on the loans under
this scheme will be up to 5%. Borrowers that are on the active taxpayers list,
will be able to get loans at a further reduced mark-up rate of 4%. The scheme
has been designed to give preference to smaller businesses. Businesses with a 3
month wage and salary expense of up to Rs. 200 million will be able to avail
the full amount of their expense in financing while those with a 3 month wage
and salary expense of greater than Rs. 500 million will be able to avail up to
50% of their expense. Businesses in the middle category will be able to avail
up to 75 percent of their 3 months’ salary and wage expense.
The banks will not charge any
loan processing fee, credit limit fee or prepayment penalties for loans under
this scheme. A grace period of six months will be allowed to the borrowers
while the repayment of the principal amount will be made in two years. Banks
will provide weekly reporting to SBP on the take up of the scheme and in
particular the reasons for any denials of financing requests under this scheme.
SBP expects that one of the main benefits of the scheme is that employers that
retain workers on their payroll will be able to restore or increase production
quickly once the situation normalizes. The scheme will ease the liquidity
constraints of the businesses and they can use their available financial
resources to meet other working capital requirements.
Interested businesses can access details of the scheme at http://www.sbp.org.pk/smefd/circulars/2020/C6.html and http://www.sbp.org.pk/smefd/circulars/2020/C7.html For further
clarification for any information not available at this website, interested
businesses can get further information from SBP by writing to covid19.stimulus@sbp.org.pk
or calling 021-111727273 during normal business hours.
SBP has taken a number of other
measures in recent weeks to mitigate the impact of covid19 on Pakistan’s
economy including an extension in repayment of loan principal amounts by one
year, concessional financing for hospitals to procure equipment to combat
covid19 as well as other measures. A complete list of all measures is available
at http://www.sbp.org.pk/corona.asp. SBP has been closely monitoring the credit
conditions faced by the businesses and households and will take every possible
measure to perform its due role throughout this disruption phase.
Governor state bank of Pakistan Raza Baqer in a video message explained the highlights of this scheme
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