KARACHI: As a measure to support employers in retaining their staff in the face of worst economic fallout posed by COVID-19 pandemic, the State Bank of Pakistan (SBP) has introduced Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns on Friday.
The scheme is a temporary refinance relief for businesses with the core objective to incentivize businesses to not lay off their workers during COVID-19 Pandemic.
The scheme will be available to all businesses in Pakistan through banks and will cover all types of employees including permanent, contractual, daily wages as well as outsourced workers.
It will provide financing for wages and salaries expense for three months from April to June 2020 for businesses which do not layoff their employees for these three months.
The mark-up on the loans under this scheme will be up to 5 per cent. Borrowers on the active taxpayers list, will get a further reduced mark-up rate of 4 per cent.
The scheme has been designed to give preference to smaller businesses with a three-month wage and salary expense of up to Rs200 million will be able to avail the full amount of their expense in financing while those having greater expense than Rs500 million will be able to avail up to 50 per cent of their expense. Businesses in the middle category will be able to avail up to 75 per cent of their 3 months’ salary and wage expense.
The loans will be provided without any processing fee, credit limit fee or prepayment penalties the banks have been directed. A grace period of six months will be allowed to the borrowers while the repayment of the principal amount will be made in two years.
SBP will receive weekly reporting from banks on the take up of the scheme and in particular the reasons for any denials of financing requests under this scheme.
The central bank said that the scheme will ease the liquidity constraints of the businesses and they can use their available financial resources to meet other working capital requirements.
