Rozgar scheme deadline extended

Published July 1, 2020
The central bank has reduced the financial cost to the private and public businesses and households by reducing the policy rate by a cumulative 625 basis points since Mar 17. — SBP/File
The central bank has reduced the financial cost to the private and public businesses and households by reducing the policy rate by a cumulative 625 basis points since Mar 17. — SBP/File

KARACHI: The State Bank of Pakistan (SBP) on Wednesday widened the scope and extended the deadline of the Rozgar Scheme for Supporting Employment for another three months.

“To improve the cash flow of businesses and households, it [the Rogzar scheme] allowed deferment of principal amount and restructuring of loans. In addition to these measures, the SBP introduced several refinance schemes to support employment and investment to fight the economic impact of Covid-19,” said the SBP in an official release.

The SBP has taken several steps to provide economic support to businesses and households since the coronavirus outbreak. The central bank has reduced the financial cost to the private and public businesses and households by reducing the policy rate by a cumulative 625 basis points since Mar 17.

“This scheme provides concessional loans to businesses for wages and salaries expenses provided they commit not lay off their employees for the period of the loan,” it said.

“The SBP has decided to extend the validity of this scheme by another three months till September. Businesses will now be able to obtain financing to pay wages and salaries for a maximum period of six months starting April till September. “

Moreover, the press release said that “with a view to incentivise banks/DFIs for financing to small-and-medium enterprises (SMEs) and non-SME corporates, the government introduced a Risk-Sharing Facility (RSF) for SBP’s Rozgar Scheme.”

Under this facility, the government bears 40 per cent first loss on disbursed portfolio (principal portion only) for eligible borrowers.

As of June 19, financing of Rs25.4 billion has been approved by banks for around 1,100 businesses covering wages and salaries of over 220,000 employees.

However, “the government has now decided not only to extend the validity of its RSF for another three months for the SMEs and small corporates with turnover of up to Rs2bn but also enhanced risk coverage for SMEs from 40pc to 60pc first loss on portfolio basis.”

Published in Dawn, July 1st, 2020

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