The State Bank of Pakistan (SBP) Wednesday announced an incentive scheme, “entitled Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns”, that enables the provision of concessional credit for payroll finance to businesses that commit to not lay off workers for the next three months.
The SBP has introduced further incentives under this scheme to support employment and avoid layoffs in the country, said a press release issued here.
These additional incentives include relaxations in collateral requirements, further reduction in end-user rate, reimbursement of wages, special accounts for employees to receive wages, borrowing from banks other than maintaining payrolls, simplification of application form for SMEs and bank’s exposure limits. These additional incentives are effective as of today. Further information on these incentives is provided below and further details are available at the following link: http://www.sbp.org.pk/corona.asp
Based on feedback from stakeholders, SMEs including vendors and distributors were particularly facing the problem of providing security/collateral. To address this issue, SBP has now allowed banks for providing financing against corporate guarantees of companies in value / supply chain relationship with the borrowers. Moreover, banks have also been encouraged to provide loans without any collateral i.e. taking clean exposure of up to Rs 5 million.
SBP has enhanced the incentive to business which are active tax payers by reducing the mark up rate for them to 3% that was set as 4% earlier.
Now the SBP will provide refinance to banks at 0%. This also increases the gap between the rates charged to active tax payer and the non-tax payers businesses, as the latter can be charged an end user markup rate of up to 5%.