SBP introduces scheme for businesses to save jobs
ISLAMABAD: 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 was to give incentive to businesses to not lay off their workers during COVID-19 pandemic, an SBP press statement said.
The scheme would be available to all businesses in Pakistan through banks and would cover all types of employees including permanent, contractual, daily wages as well as outsourced workers.
The scheme would provide financing for wages and salaries expense for three months from April to June 2020 for those businesses which do not lay off their employees for these three months.
According to the statement, the mark-up on the loans under this scheme would be up to 5%, adding the borrowers that were on the active taxpayers list, would 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, it said adding that businesses with a three-month wage and salary expense of up to Rs200 million would be able to avail the full amount of their expense in financing while those with a three-month wage and salary expense of greater than Rs500 million would be able to avail up to 50% of their expense.
Businesses in the middle category would be able to avail up to 75 percent of their 3 months’ salary and wage expense.
The statement said the banks would not charge any loan processing fee, credit limit fee or prepayment penalties for loans under this scheme.
A grace period of six months would be allowed to the borrowers while the repayment of the principal amount would be made in two years. Banks will provide weekly reporting to the SBP on the take up of the scheme and in particular the reasons for any denials of financing requests under this scheme.
The SBP expects that one of the main benefits of the scheme was that employers that retain workers on their payroll would be able to restore or increase production quickly once the situation normalizes. The scheme would ease the liquidity constraints of the businesses and they can use their available financial resources to meet other working capital requirements. – APP