SBP extends Rozgar Scheme until September

KARACHI: The State Bank of Pakistan has extended the rozgar scheme for another three months in light of the Covid-19 pandemic, and also widened its scope in collaboration with the government, according to a statement released on Tuesday. 

The Rozgar Scheme, also known as the Refinance Scheme to Support Employment and Prevent Layoff of Workers, provides concessional loans to businesses for wages and salaries, if they commit not lay off their employees for the loan’s period. 

Businesses will now be able to obtain financing to pay wages and salaries for a maximum period of six months starting April 2020 till September 2020. 

Effectively, this suggests that not only businesses can obtain loans to fund their wages and salaries bill up to a period of 3 months from July till September 2020, but can also get reimbursement for the wages and salaries paid during April to 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, as of 19 June, financing of Rs112.8 billion was approved by banks for 1,653 businesses, covering the wages and salaries of over 1.1 million employees.

Previously, the government had introduced a Risk Sharing Facility for SBP’s Rozgar Scheme to incentivize banks to provide loan to small and medium enterprises. Under this facility, the government bears a 40pc first loss on disbursed portfolio (principal portion only) for eligible borrowers. 

This facility has now been extended for another three months, and the risk coverage has been increased from 40pc to 60pc. 

“This higher risk coverage will help banks to provide financing under the Rozgar scheme to collateral deficient SMEs which are otherwise struggling hard. SBP now expects that more SMEs will benefit from the scheme mainly due to higher risk coverage, more awareness of the scheme among the stakeholders,” the statement read.

Under the RSF, as of 19 June, financing of Rs25.4 billion was approved by banks for around 1100 businesses, covering wages and salaries of over 220,000 employees.