SBP has decided to extend the validity of the Rozgar scheme for another three months by the end of September this year while also increasing the risk coverage for SMEs under the scheme in collaboration with the government.
Businesses will now be able to obtain financing to pay wages and salaries for a maximum period of 6 months starting April 2020 till September 2020.
SBP Rozgar Scheme
The Refinance Scheme to Support Employment and Prevent Layoff of Workers is commonly known as the SBP Rozgar scheme. It provides concessional loans to businesses for wages and salaries expenses provided they commit not lay off their employees for the period of the loan.
Effectively, this suggests that not only can businesses obtain loans to fund their wages and salaries bill up to 3 months from July till September 2020, but they can also get reimbursement for the wages and salaries paid during April-June 2020. For those who have already availed financing under the scheme, financing limits for the months of July to September 2020 will be calculated on the same basis on which limits were calculated for the months of April to June 2020.
Under the scheme, up till 19th June 2020, financing of Rs. 112.8 billion has been approved by banks for 1653 businesses covering wages and salaries of over 1.1 million employees.
GoP Risk Sharing Facility under SBP Rozgar Scheme
With a view to incentivize banks/DFIs for financing to SMEs and non-SME corporates, Government of Pakistan (GoP) introduced a Risk Sharing Facility (RSF) for SBP’s Rozgar Scheme. Under this facility, the federal government bears a 40% first loss on the disbursed portfolio (principal portion only) for eligible borrowers.
Government has now decided not only to extend the validity of its risk-sharing facility (RSF) for another three months for SMEs and small corporates with a turnover of up to Rs. 2 billion but also enhanced risk coverage for SMEs from 40% to 60% first loss on a portfolio basis.
The higher risk coverage will help banks provide financing under the Rozgar scheme to collateral deficient SMEs which are otherwise struggling. SBP now expects that more SMEs will benefit from the scheme due to higher risk coverage, more awareness of the scheme among the stakeholders, and robust support mechanism to address queries and complaints with a well-organized set up comprising regional focal persons of SBP Offices and banks all across the country.
Under the RSF, up till 19th June 2020, financing of Rs. 25.4 billion has been approved by banks for 1100 businesses covering wages and salaries of over 220,000 employees.
It is expected that these measures will allow more businesses to benefit from the schemes and support their employees.