Banks lend out Rs125.9bn under Rozgar Scheme: SBP

KARACHI: Banks have approved loans worth Rs125.9 billion under the State Bank of Pakistan’s Rozgar Scheme, covering the salaries of over 1.2 million employees as of July 10, according to a report released by the central bank on Monday.

Of the approved amount, Rs31 billion was for Small and Medium-sized Enterprises (SMEs) and small corporates, defined as businesses with an annual turnover not exceeding Rs2 billion.

The Rozgar Scheme was introduced on April 10 and provides concessional credit at 3pc to any business that commits to not lay off workers for three months. The SBP complemented the scheme on May 10 with a risk-sharing facility, under which the government bears up to 60pc first loss on the principal amount for SME borrowers and 40pc for small corporates. 

Initially, the scheme was available until the end of June 2020, but the SBP decided to extend the scheme by another three months to September 2020. As of July 10, 2,068 businesses have availed the scheme, of which 1,449 are SMEs and small corporates. 

The SBP noted some improvements in the last few months. For instance, at the end of April 2020, only 18pc of loan applications had been approved, but by July 10, this had increased to 76pc.

Similarly, the number of loans approved against the requested amount also improved. The acceptance ratio for financing increased from 26pc at the end of April to 82pc on July 10. 

Consequently, the number of employees benefitting from the scheme in terms of acceptance ratio also increased from 26pc to 85pc during the same period.

The acceptance ratio for SMEs and small corporates, both in terms of the number of applications and amount, also increased from 35pc and 37pc, respectively, on May 15, to 72pc and 71pc on July 10. The total number of employees benefitting from the acceptance of financing requests increased from 36pc to 75pc during the same period.  

Five banks together constitute around 58pc share of overall approved financing amount under the risk-sharing facility, or a total of Rs18.1 billion. Earlier on June 12, this share used to be 61pc; the lower share reflects the fact that other banks have improved their performance.

JS Bank Ltd leads with the financing of Rs4.57 billion, followed by Habib Bank financing Rs4.03 billion. Bank Al-Habib, Bank Alfalah, and Askari Bank constitute the remaining share. 

Four of these five banks – JS Bank Ltd, Habib Bank, Bank Alfalah, and Askari Bank – were also the top-performing banks in terms of acceptance ratio, along with Habib Metropolitan Bank. Their acceptance ratios in terms of amount stood in the range of 62pc to 86 pc, while the acceptance ratios in terms of the number of applications approved were between 65pc to 89pc.

The least performing banks in terms of extending financing include The Bank of Khyber with only Rs103 million given in financing, Standard Chartered Bank (Pakistan), First Women Bank, MCB Bank, and Bank Islami. Within these five banks, the number of applications approved ranged from 7 to 29, while the amount approved ranged from Rs103 million to Rs389 million, as of July 10. 

Three of these five banks – The Bank of Khyber, Standard Chartered Bank (Pakistan) and MCB Bank – were also the least performing banks in terms of acceptance ratio, along with United Bank Ltd, and National Bank of Pakistan. 

The acceptance ratios of the five least performing banks were in the range between 19pc to 41pc, while the acceptance ratios in terms of the number of applications approved fell in the range of 13pc to 57pc.