SBP enhances scope and financing limits under Rozgar Scheme

State Bank will now finance up to 100% of wages and salaries of businesses

KARACHI (Dunya News) – State Bank of Pakistan (SBP) has further enhanced the financing limits and scope of its largely appreciated relief scheme which is protecting layoffs in the private sector.

State Bank will now finance up to 100% of wages and salaries of businesses with an average 3-month wage bill of up to Rs500 million. This can be used for the onward payment of wages and salaries for the months of April, May, and June 2020. Earlier, 100% financing was available up to a wage bill of Rs200 million only.

Similarly, for businesses with a 3-month wage bill exceeding Rs. 500 million, State Bank will now finance of up to 75% with maximum financing of Rs. 1 billion. Earlier, 75% of financing was available up to a maximum of Rs. 375 million and 50% up to a maximum of Rs. 500 million.

The above changes are applicable with immediate effect. However, businesses that had earlier availed lower financing due to applicable limits can now avail additional financing on the basis of revised criteria.

This increase in financing limits along with the government’s risk-sharing facility for collateral deficient SMEs and small corporates will enable the full array of businesses to benefit from SBP’s Rozgar Scheme and hence prevent large scale layoffs.

State Bank has also extended the availability of its refinance scheme to non-deposit taking financial institutions as well. They can now avail financing under the scheme for payment of wages and salaries of their employees.

Since the launch of the scheme till May 08, 2020, banks have received requests of more than 1,440 businesses for over Rs. 103 billion for providing wages and salaries to one million employees whose jobs have been supported because of this scheme.

Of this amount, banks have already approved financing of Rs. 47 billion for 500 companies covering over 450,000 employees.

Since its launch, Refinance Scheme to Support Employment and Prevent Layoff of Workers, called Rozgar Scheme in common parlance, State Bank has been constantly receiving feedback from various stakeholders, making the scheme more facilitative for businesses and creating incentives to prevent the layoff of employees under current COVID Pandemic scenario.

Many of the changes in the scheme were carried out to ensure that the benefits of the scheme should reach SMEs that offer employment to a large number of people.

In this regard, recently announced the government’s risk-sharing facility and allowing corporate guarantees as collateral are expected to incentivize banks in extending loans to collateral deficient SMEs.