Govt relaunches Kamyab Jawan loan program

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Karachi: The government Monday announced that the prime minister’s interest-free and subsidized loan programs for young entrepreneurs will be resuming. Over the past five months, the program has been briefly paused and altered to better serve agriculture and small enterprises.

The State Bank of Pakistan (SBP) stated in an announcement on Monday that “the amended scheme has incorporated two new components of funding, namely micro-loans and agriculture loans.”

The program offers financing in three instalments of up to Rs. 7.5 million each at subsidized interest rates ranging from 0% to 7% for a maximum of nine years. The application form will mention the processing duration, which will not be longer than 45 days.

According to the SBP notice, “women borrowers will receive 25% of the loans.” The Prime Minister’s Youth Business and Agriculture Loan Scheme (PMYB&ALS), formerly known as the Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme (PMKJ-YES), has been renamed by the Pakistan Muslim League-Nawaz (PML-N) coalition administration.

Loan Type

Within the total maximum financing limit of Rs 7.5 million, a client may take out a maximum of two loans, one of which may be long-term and one of which may be short-term. Within the total maximum financing limit of Rs 7.5 million, a client may apply for one production loan and one development loan in the case of agriculture.

The program includes coverage for all industries and goods. All crop and non-crop industries (such as crop production, livestock, poultry, fishing, dairy, etc.) are also eligible in the case of agriculture.

The application form will mention the processing duration, which will not be longer than 45 days. The NADRA online CNIC verification fee is included in the non-refundable form processing price of Rs. 100.

Loan Size

Three tiers have been established for the loan’s magnitude.

Eligible borrowers may purchase up to Rs. 500,000 apiece at no interest under Tier 1 (T1).
Borrowers may purchase amounts beyond 500,000 rupees and up to Rs1.5 million under tier 2 (T2) at a 5% subsidized interest rate.
Under tier 3, they are permitted to borrow up to Rs7.5 million at a 7% subsidized interest rate (T3).

T1 and T2 borrowers are obliged to contribute 10% of the project’s total cost in cash (or immovable property of equal value). For borrowers who fall under T3, the equity-to-debt ratio would be 20% to 80%, respectively.

Loan Financing

For long-term/development loans, the financing period for T2 and T3 will be up to eight years, with a maximum grace period of up to one year. The notification states that the maximum term for working capital, production, and murabaha under T2 and T3 will be five years.

Working capital and production loans from banks will be a possibility; only markup will be due during the first two years. Following that, the principal and markup will both be repaid during the following three years, bringing the total repayment time to five years.

The funded term for the authorized loans will not exceed three years, and the payback will be made in equal monthly instalments. The term of a crop loan may be up to one year, and repayment will be made in one lump sum at or before maturity, in accordance with the growing season.

Loan Eligibility

All Pakistani nationals with a CNIC who are between the ages of 21 and 45 and have entrepreneurial potential are eligible. The minimum age requirement for IT/E-Commerce-related firms will be 18 years old, and matriculation or an equivalent degree will be required.

Individuals and sole owners are subject to the aforementioned age restriction. Only one owner, partner, or director must fall within the aforementioned age range for all other business entities, such as partnerships and corporations. Young people in the aforementioned age ranges who own small and medium-sized enterprises (both new and established companies) are also eligible.

And as per modified eligibility, Farmers will be classified according to SBP’s “Indicative Credit Limits & Eligible Items for Agriculture Financing 2020” in the case of agriculture.