Progress on Measures by State Bank of Pakistan


COVID19
 is challenging human life globally and straining economic activity. Governments as well as central banks are taking extraordinary measures to address the challenges associated with this situation. Pakistan is no exception. SBP is taking a range of measures to protect the safety of public and address the economic impact. In line with our mandate, we are focused on ensuring that inflation remains contained, reducing the impact of COVID-19 on economic growth and employment, and overseeing that the banking and payments system remains healthy. In this context, we have taken a number of policy measures already, as described below. We are working with stakeholders to continuously assess the situation and stand ready to take additional measures as the situation related to COVID-19 and its impact on the economy become clearer.


Helplines:
Email: [email protected] or Phone: +92-21-111-727-273


This page will be regularly updated to include measures undertaken to combat COVID-19. If you would like further information on these measures in the context of COVID-19 or if you experience issues with commercial banks in benefiting from these measures, you can contact a dedicated COVID-19 SBP team by email at [email protected] or by phone at 111-727-273.

Implementation plan for facilitating businesses wanting to avail SBP’s Refinance Scheme to Support Employment and Prevent Layoff of Workers
To facilitate SMEs and small corporates in availing financing under the refinance schemes for payment of wages and salaries to prevent layoffs (Rozgar Scheme), particularly under the Risk Sharing Facility announced by the federal government, SBP has prepared a comprehensive arrangement that was shared with several regional chambers of commerce on June 10, 2020:

http://www.sbp.org.pk/press/2020/Pr-10-Jun-20.pdf

According to this arrangement for each of the 15 regional cities where SBP’s offices are located, SBP has created teams of Focal Persons of heads of the SBP’s regional offices (Chief Managers) and regional senior officials of all the banks in 15 cities. Contact information including email addresses and mobile numbers of these senior officials are provided at the links below. SMEs and small corporates that are experiencing difficulties in availing the scheme from banks are requested to look up the contact information of the relevant SBP and bank officials in their region from the lists below and to email both the SBP Chief Manager and the relevant bank focal person. The Chief Mangers and banks FPs have been instructed on follow-up SOPs when such complaints are received for their speedy disposal. The details of the FPs are available as follows:

If the concerns of SMEs and small corporates are still not addressed after following through on above mechanism they are encouraged to write to [email protected] noting the names of the officials they have contacted and the summary of their case.


SBP Refinance Scheme to Support Employment and Prevent Layoff of Workers (Updated on 27 Julu, 2020) 
Rozgar Scheme Monthly Report:
Banks' Performance on SBP's Rozgar Refinance Scheme with Risk Sharing Facility - (Updated till 10th July, 2020)  

Key Features of Rozgar Scheme:
http://www.sbp.org.pk/corona/pdf/KeyFeaturesRozgarScheme.pdf 


SBP's facilitates businesses availing financing under Rozgar Scheme to disburse salaries before Eid-ul-Azha

On 24 July 2020, SBP allowed disbursement of wages/ salaries for the month of July to be made before Eid-ul-Azha under its Rozgar Scheme. Earlier the banks were required to disburse salaries typically after the completion of the month. Now the businesses may avail financing to pay wages and salaries for the month of July or get reimbursement after paying wages. Further, we have also provided flexibility to the businesses by allowing them to avail financing from more than one bank. Businesses were facing difficulty in availing financing from one bank due to their credit limits or other reasons. However, businesses cannot avail financing for a specific month from more than one bank.


Circular:
http://www.sbp.org.pk/smefd/circulars/2020/CL24.htm

SBP extends the Rozgar Scheme for Supporting Employment for another 3 months and widens its scope in collaboration with Government of Pakistan

On 30 June 2020, following changes have been made:

1. Rozgar Scheme: This scheme provides concessional loans to businesses for wages and salaries expenses provided they commit not lay off their employees for the period of the loan. SBP has decided to extend the validity of this scheme by another 3 months to end September, 2020. Businesses will now be able to obtain financing to pay wages and salaries for a maximum period of 6 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-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, up till 19th June 2020, financing of Rs 112.8 billion have been approved by banks for 1653 businesses covering wages and salaries of over 1.1 million employees.

2. GoP Risk Sharing Facility under SBP Rozgar Scheme: With a view to incentivize banks/DFIs for financing to SMEs and non SME corporates, Government of Pakistan (GoP) introduced a Risk Sharing Facility (RSF) for SBP’s Rozgar Scheme. Under this facility, GoP bears 40% first loss on disbursed portfolio (principal portion only) for eligible borrowers. Government of Pakistan has now decided not only to extend validity of its risk sharing facility (RSF) for another three months for SMEs and small corporates with turnover of up to Rs 2 billion but also enhanced risk coverage for SMEs from 40% to 60% First Loss on portfolio basis. This higher risk coverage will help banks to provide financing under 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 and robust support mechanism to address queries and complaints with well organized set up comprising regional focal persons of SBP Offices and banks all across the country. Under the RSF, up till 19th June 2020, financing of Rs 25.4 billion have been approved by banks for around 1100 businesses covering wages and salaries of over 220,000 employees.

Circulars:
http://www.sbp.org.pk/smefd/circulars/2020/CL14.htm
http://www.sbp.org.pk/smefd/circulars/2020/CL15.htm

SBP enhances scope and financing limits under its Rozgar Scheme

On 11 May 2020, SBP took a step further to facilitate middle and large businesses, which employ large numbers of people, to ensure payment of wages and salaries under this scheme. SBP enhanced its refinance limits to finance up to 100% of wages and salaries of businesses with average 3- month wage bill of up to Rs500 million. This can be used for the onward payment of wages and salaries April, May and June, 2020. Earlier, 100% financing was available up to a wage bill of Rs200 million only. Similarly, for businesses with 3-month wage bill exceeding Rs500 million, State Bank will now finance of up to 75% with maximum financing of Rs1 billion. Earlier, 75% financing was available up to a maximum of Rs375 million and 50% up to a maximum of Rs500 million. These changes are applicable with immediate effect. However, businesses that had earlier availed lower financing due to applicable limits can now avail additional financing on the basis of revised criteria.

A comparison of previous and new financing limits is given in the following table:

Category Wages and Salaries Bill for 3 months Previous Loan Limit New Loan Limits
(1) (2) (3) (4)
A
Less than or equal to Rs. 200 million
100% of 3 months wage bill
100% of 3 months wage bill
B
More than Rs. 200 million and less than or equal to Rs.500 million
100% of 3 Rs. 200 million or 75% of 3 months wage bill, whichever is higher subject to a maximum cap of Rs 375 million wage bill
100% of 3 months wage bill
C
More than Rs.500 million
Rs. 375 million or 50% of 3 months wage bill, whichever is higher subject to maximum cap of Rs. 500 million
Rs.500 million or 75% of 3 months wage bill, whichever is higher subject to maximum cap of Rs. 1 billion

Further, SBP has also extended the availability of its refinance scheme to non-deposit taking financial institutions as well. They can now avail financing under the scheme for payment of wages and salaries of their employees.

Since the launch of the scheme till May 08, 2020, banks have received requests of more than 1,440 businesses for the financing of over Rs. 103 billion for providing wages and salaries to around one million employees whose jobs have been supported because of this scheme. Of this amount, banks have already approved financing of Rs 47 billion for 500 companies covering over 450,000 employees.


Circular:
http://www.sbp.org.pk/smefd/circulars/2020/CL10.htm

Ministry of Finance and SBP introduce risk-sharing mechanism to support bank lending to SMEs and small businesses to avail SBP's Refinance Facility to Support Employment

On 6 May 2020, Federal Government allocated Rs30 billion under a credit risk sharing facility for the banks spread over four years to share the burden of losses due to any bad loans in future. Under this risk sharing arrangement, Federal Government will bear 40% first loss on principal portion of disbursed loan portfolio of the banks. This facility will incentivize banks to extend loans to collateral deficient SMEs and small corporates with sales turnover of up to Rs2 billion to avail financing under SBP refinance scheme.

The risk-sharing mechanism is expected to increase the banks' incentive to lend to SMEs and small corporate under this scheme. It was developed on the basis of feedback received from relevant stakeholders and in collaboration between MOF and SBP.

Circular:
http://www.sbp.org.pk/smefd/circulars/2020/C9.htm

On 22 April 2020, SBP introduced further incentives for businesses under refinance scheme for payment of wages and salaries to the workers and employees to prevent layoffs. To address the issue of providing security/collateral for small vendors/ distributors, financing has been allowed 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 incentivized businesses which are active tax payers by reducing the mark up rate 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 payers and the non-tax payers businesses, as the latter can be charged an end user markup rate of up to 5%.

To facilitate employees for receiving wages under the scheme directly, banks have been allowed to open accounts on info & documents provided by the employers. Banks will ensure NADRA Verisys before activation of accounts which will solely be used for salary disbursement and withdrawal.

Businesses have also been given flexibility to avail loan under SBPs refinance scheme for wages from any bank and they will not be limited to avail loans from the bank that manages their payroll. SMEs can apply for the financing on a simplified loan application form prescribed by SBP for this scheme. Also, banks' exposure under the scheme has been exempted from per-party or the per-group exposure limits. It will enable them to lend to borrowers that have exhausted their exposure limits.

All these benefits will also be available to businesses availing financing under the scheme from Islamic Banking Institutions.

Circular:

http://www.sbp.org.pk/smefd/circulars/2020/CL7.htm

Earlier the scheme was introduced with the following features.

Scope:Refinancing will be available to finance wages and salaries of all types of workers and employees like the permanent, contractual, daily wagers as well as outsourced workers. The scheme will be available to existing as well as new borrowers of banks and DFIs.

Eligibility:The borrowers availing this facility will undertake not to lay off their workers/employees at least for next three months from the date of first disbursement except in case of any disciplinary action. The banks have been asked to give preference to businesses that are labor intensive and affected by Corona virus problem.

Loan limits:Loans to businesses will be available to finance 3 months of wages - April to June 2020. The businesses have been placed in three categories on the basis of three months wage bill (i) up to Rs200 million; (ii) Rs200-500 million; and (iii) Above Rs500 million. In each category loan limits will be (i) 100% of the wage bill to a maximum of Rs200 million; (ii) 75% of wage bill to a maximum of Rs375 million; (iii) 50% of the wage bill to a maximum of Rs500 million.

Disbursement:Loans will be credited directly to the bank accounts/branchless banking accounts/mobile wallets of the workers and employees of the borrowers. Businesses can also make payments in cash provided they make available details of such workers and employees to their banks.

Interest rate:The end rate that will be charged from the borrowers will be up to 5% p.a. Borrowers that are on active taxpayers list under the Income Tax Ordinance, 2001 would be eligible for 1% subsidy and will be charged an interest rate of 4%.

Repayment:Repayment of the loan will start from January 2021 after a grace period of 6 months. During the grace period, borrowers will pay interest on quarterly basis. The repayment of the loan can be made in equal 24-month or 8-quarter installments


Circulars:

http://www.sbp.org.pk/smefd/circulars/2020/C6.htm
http://www.sbp.org.pk/smefd/circulars/2020/C7.htm


FAQS:

FAQs - Refinance Scheme for Payment of Wages & Salaries - 19-May-2020

FAQs - Refinance Scheme for Payment of Wages & Salaries - 24-Jul-2020

SBP reduces policy rate by a cumulative 625 bps since 17 March 2020 (Updated on 25 June, 2020) 

This decision reflected the MPC's view that the inflation outlook has improved further, while the domestic economic slowdown continues and downside risks to growth have increased. Against this backdrop of receding demand-side inflation risks, the priority of monetary policy has appropriately shifted toward supporting growth and employment during these challenging times.

Consistent with its mandate, the MPC re-asserted its commitment to supporting households and businesses through the Covid-19 crisis and minimizing damage to the economy. In this context, the MPC felt that from a risk management point of view, a prompt response to downside risks to growth was called for given the improved inflation outlook. In addition, the MPC noted that with approximately Rs. 3.3 trillion worth of loans due to be repriced by early July 2020, this was an opportune moment to take action from a monetary policy transmission perspective. In this way, the benefits of interest rate reductions would be passed on in a timely manner to households and businesses.

The MPC noted that the Covid-19 pandemic is spreading in many emerging markets, including Pakistan, and there are fears of a second wave in several other countries. The MPC observed that risks to the global outlook are heavily skewed to the downside and the path of recovery remains uncertain. The MPC also noted that in its update of the World Economic Outlook (WEO) released yesterday, the IMF downgraded its 2020 global growth forecast further to -4.9 percent, 1.9 percentage points lower than in April, and projected a more gradual recovery than previously anticipated.

Read the full Monetary Policy Statement issued on 25 June 2020

http://www.sbp.org.pk/m_policy/2020/MPS-Jun-2020-Eng.pdf

Earlier in its meeting on 15 May 2020, MPC had reduced the policy rate by 100bps to 8%. This decision reflected the MPC's view that the inflation outlook has improved further in light of the recent cut in domestic fuel prices. As a result, inflation could fall closer to the lower end of the previously announced ranges of 11-12 percent this fiscal year and 7-9 percent next fiscal year.

The MPC highlighted that the coronavirus pandemic has created unique challenges for monetary policy due to its non-economic origin and the temporary disruption of economic activity required to combat it. While easier monetary policy can neither affect the rate of infection transmission nor prevent the near-term fall in economic activity due to lockdowns, it can provide liquidity support to households and businesses to help them through the ensuing temporary phase of economic disruption. In particular, the successive policy rate cuts and sizeable cheap loans provided through the SBP’s enhanced refinancing facilities have helped maintain credit flows, bolster the cash flow of borrowers, and support asset prices. This has contained the tightening of financial conditions that would otherwise have amplified the initial necessary contraction in activity.

The MPC noted the swift and forceful monetary easing of 525 basis point in the two months since the beginning of the crisis and SBP's measures to extend principal repayments, provide payroll financing, and other measures to support liquidity. Together with the government's proactive fiscal stimulus-including targeted support packages for low-income households, SMEs, and construction-as well as assistance from the international community, these actions should provide ample cushion to growth and employment, while also maintaining financial stability. This coordinated and broad-based policy response has provided relief and stability and should provide support for recovery as the pandemic subsides.

In reaching its decision, the MPC considered key trends and prospects in the real, external and fiscal sectors, and the resulting outlook for monetary conditions and inflation.


Read the full Monetary Policy Statement issued on 15 May 2020

http://www.sbp.org.pk/m_policy/2020/MPS-May-2020-Eng.pdf

Earlier, the MPC in its meeting on 16 April 2020 had cut the policy rate by 200 basis points to 9 percent. On 24th March 2020, the MPC noted the worsening outlook for global and domestic economic activity in the wake of the Corona pandemic. Given the unfolding situation, the MPC noted that it "remains ready to take whatever further actions become necessary in response to the evolving economic impact of the Coronavirus."

Since the last MPC meeting, the global and domestic outlook has further deteriorated. The world economy is expected to enter into the sharpest downturn since the Great Depression, contracting by as much as 3 percent in 2020, according to projections released this week by the IMF. This is a much deeper recession than the 0.07 percent contraction during the global financial crisis in 2009. Moreover, there are severe risks of a worse outcome. In addition, global oil prices have plummeted further, with futures markets suggesting low prices will persist. Domestically, high-frequency indicators of activity-including retail sales, credit card spending, cement production, export orders, tax collections, and mobility data from Google's recently introduced Community Mobility Reports-suggest a significant slowdown in most parts of the economy in recent weeks. On the inflation front, both the March CPI out-turn and more recent weekly SPI releases in April also show a marked reduction in inflation momentum.

While there is exceptionally high uncertainty about the severity and duration of the Coronavirus shock, the developments discussed above imply further downward revision in the outlook for growth and inflation. The economy is expected to contract by -1.5 percent in FY20 before recovering to around 2 percent growth in FY21. Inflation is expected to be close to the lower end of the previously announced 11-12 percent range this fiscal year, and to fall to 7-9 percent range next fiscal year. While there are some upside risks to headline inflation in case of temporary supply disruptions or food price shocks, these are unlikely to generate strong second-round effects due to the weakness of the economy. Similarly, the inflationary impact of the recent exchange rate depreciation is expected to be contained given low import demand and falling global prices.

Read the full Monetary Policy Statement issued on 16 April 2020

http://www.sbp.org.pk/m_policy/2020/MPS-Apr-2020-Eng.pdf

On 24th March 2020, MPC had cut the policy rate by 150 basis points to 11 percent. At its earlier meeting on 17th March 2020, the MPC noted considerable uncertainty about how the Coronavirus outbreak would impact the global economy and Pakistan. In the statement issued following that meeting, the MPC "emphasized that it stood ready to take further actions if and when needed as more information becomes available on the outlook for inflation and growth."

The developments discussed above imply that the outlook for growth and inflation in Pakistan is likely to be revised down further. In the wake of this new information, the MPC agreed at its emergency meeting today, to take further action. Accordingly, the MPC has decided to cut the policy rate by a further 150 basis points to 11 percent. This brings the cumulative easing over the past one week to 225 basis points. The MPC was of the view that this cumulative easing would cushion the growth slowdown while protecting inflation expectations.

Read the full Monetary Policy Statement issued on 24 March 2020

http://www.sbp.org.pk/m_policy/2020/MPS-Mar-24--03-2020-Eng.pdf

Earlier on 17th March 2020, MPC of the SBP cut its policy rate by 75 basis points. As noted in the Monetary Policy Statement, the dominant development since the last MPC meeting has been the outbreak of the Coronavirus pandemic. This has precipitated a slowdown in world demand and volatility in global financial markets, as well as a steep fall in global oil prices. Together with the domestic deceleration in food prices and significant decline in consumer price expectations, the outlook for inflation in Pakistan has therefore improved, paving the way for a rate cut.


The current market volatility being experienced in Pakistan is externally driven and the strengthening in the fundamentals of Pakistan’s economy that drove the improvement in Pakistan markets before the Coronavirus outbreak remains intact. As a result, volatility is likely to subside as global risk aversion reduces. The SBP stands ready to take whatever additional actions that may be necessary to safeguard price and financial stability and support economic growth.

Read the full Monetary Policy Statement issued on 17 March 2020

http://www.sbp.org.pk/m_policy/2020/MPS-Mar-2020-Eng.pdf

Prime Minister's COVID-19 Pandemic Relief Fund-2020 (Updated on 07 April, 2020) 

The fund will accept donations/contributions from people living inside and outside Pakistan through various methods. For this purpose, a separate bank account has been set up at National Bank of Pakistan (NBP) to collect funds.

The fund will be administered by the Poverty Alleviation and Social Safety Division in consultation with the Finance Division.


Circular:

http://www.sbp.org.pk/acc/2020/C2.pdf

Banks not to charge service fee on donations through payment cards.

We have instructed the banks not to charge any service fee including Interchange Reimbursement Fee (IRF), Merchant Discount Rate (MDR), Merchant ID Fee, onboarding fee or any other fee that may be applicable on any payments/donations to the Prime Minister's as well as provincial governments' Covid-19 Pandemic Relief Funds through payment cards.

Circular:

http://www.sbp.org.pk/psd/2020/CL2.htm



Relief Package for Households, Businesses & Refinance Schemes (Updated on 08 July, 2020) 

Availability of Deferment of Principal Amount of Loans facility extended till September 2020

On 7th July 2020, SBP extended the Deferment of Principal Amount facility up till 30th September 2020. This facility will however be available for Small & Medium Enterprise Financing, Consumer Financing, Housing Finance, Agriculture Finance and Micro financing only. The facility is not being extended to corporates and commercial borrowers since a significant amount of their loans and advances has already been deferred. Up till 3rd July 2020, banks have deferred Rs. 593 billion of principal amount of loans of over 359 thousand borrowers. A very large number of borrowers— 95 percent of total beneficiaries of this scheme, as of July 3, 2020 have been small borrowers including SMEs, consumer finance, and microfinance.


Circulars:

http://www.sbp.org.pk/acd/2020/CL5.htm


http://www.sbp.org.pk/acd/2020/CL4.htm

http://www.sbp.org.pk/smefd/circulars/2020/CL18.htm

http://www.sbp.org.pk/smefd/circulars/2020/CL17.htm

http://www.sbp.org.pk/bprd/2020/CL29.htm

http://www.sbp.org.pk/bprd/2020/CL28.htm

Key highlights of the package are as follows:

Banks' overall pool of loanable funds has been increased.

To support the banking sector to supply additional loans to businesses and households, SBP has reduced the Capital Conservation Buffer (CCB) from its existing level of 2.50% to 1.50%. This will enable banks to lend an additional amount of around Rs. 800 billion, an amount equivalent to about 10% of their current outstanding loans. The reduced CCB level will remain applicable till further instructions by SBP.

The regulatory limit on extension of credit to SMEs has been permanently increased.

SMEs typically bear the brunt of credit supply contractions during periods of heightened risk aversion and economic downturn. Therefore, as a tool to incentivize banks to provide additional loans to retail SMEs, the existing regulatory retail limit of Rs. 125 million per SME has been permanently enhanced to Rs. 180 million with immediate effect. This measure will facilitate banks to provide more loans to SMEs, which currently stand at around Rs. 470 billion

Borrowing limits for individuals have been increased for one year.

The capacity to borrow from banks for individuals is limited by their capacity to bear the burden of debt, defined in terms of a percentage of their income and known as a Debt Burden Ratio (DBR). SBP has relaxed the DBR for consumer loans from 50% to 60%. This measure will allow about 2.3 million individuals to borrow more from banks in this time of need.

Payment of principal on loan obligations will be deferred by banks.

Banks and DFIs will defer the payment of principal on loans and advances by one year. To avail this relaxation, borrowers should submit a written request to the banks before 30th June 2020. They will, however, continue to service the mark-up amount as per agreed terms and conditions. The deferment of principal will not affect borrower's credit history and such facilities will also not be reported as restructured/rescheduled in the credit bureau's data. The total amount of principal coming due over the next year is about Rs. 4,700 billion.

Regulatory criteria for restructuring/rescheduling of loans have been temporarily relaxed till 31st March 2021.

For borrowers whose financial conditions require relief beyond extension of principal repayment for one year, SBP has relaxed the regulatory criteria for restructuring/rescheduling of loans. The loans that are re-scheduled/restructured within 180 days from the due date of payment will not be treated as defaults. Banks would also not be required to suspend the unrealized mark-up against such loans. In addition, the timeline for classification of "Trade Bills" has been extended from 180 days to 365 days.

Margin call requirements against bank financing have been reduced.

Keeping in view the steep decline in share prices, margin call requirement of 30% vis-a-vis banks' financing against listed shares has been significantly reduced to 10%. Banks have also been allowed to take exposure on borrowers against the shares of their group companies. Banks have currently extended loans in excess of Rs. 100 billion against listed shares.

Relief package extended to borrowers availing loans under Refinance Schemes.

The scope of relief package was expanded on 3rd April, 2020 by allowing similar relaxations to borrowers availing loans under various refinance schemes.
Borrowers from corporate, consumer, agriculture, SMEs and microfinance sectors can avail deferment of principal amount for one year while continue servicing mark up. They can also apply for rescheduling/restructuring if they are not able to service mark-up payment.

Refinance schemes and their Shariah alternatives include:

  • Long Term Financing Facility (LTFF)
  • Financing Facility for Storage of Agricultural Produce (FFSAP)
  • Refinance Facility for Modernization of SMEs
  • Refinance and Credit Guarantee Scheme for Women Entrepreneurs
  • Refinance Scheme for Working Capital Financing of Small Enterprises and Low-End Medium Enterprises
  • Small Enterprise (SE) Financing and Credit Guarantee Scheme for Special Persons


  • Circulars:

    http://www.sbp.org.pk/bprd/2020/CL12.htm

    http://www.sbp.org.pk/bprd/2020/CL13.htm

    http://www.sbp.org.pk/bprd/2020/CL14.htm

    http://www.sbp.org.pk/bprd/2020/CL25.htm

    http://www.sbp.org.pk/smefd/circulars/2020/CL3.htm

    http://www.sbp.org.pk/smefd/circulars/2020/CL4.htm

    http://www.sbp.org.pk/smefd/circulars/2020/CL5.htm

    http://www.sbp.org.pk/acd/2020/CL1.htm

    http://www.sbp.org.pk/acd/2020/CL2.htm


    FAQS:

    http://www.sbp.org.pk/bprd/pdf/FAQs-ReliefPackage-20-Apr-2020.pdf


    Supporting the Health Sector to Combat the Virus (Updated on 08 July, 2020) 
    Key Features:

    Scope & Eligibility Criteria:
    Long term finance facility for purchase of new/existing imported and locally manufactured medical equipment to be used for combating COVID-19. All hospitals and medical centers registered with respective provincial/federal agencies/commissions engaged in controlling and eradication of COVID-19 will be eligible under the facility.

    Maximum financing limit:
    Rs.500 Million (per Hospital/Medical Centre)

    Tenor:
    5 years including grace period of up to 6 months

    Civil Work:
    Up to 100% cost of civil works for setting up of isolation wards only

    End User Rate:
    Maximum 3% per annum (SBP rate of refinance will be 0%)

    Validity of the facility:
    30th September, 2020

    SBP enhances scope of refinance facility to support health facilities

    On 6 July 2020, SBP enhanced the scope of Refinance Facility to Combat Covid-19 (RFCC) and allowed manufacturers of protective gears and equipment, including items such as masks, dresses, testing kits, hospital beds, ventilators etc. to avail financing under RFCC. Moreover, to cope with the rising needs of the health facilities in general in the country, SBP has allowed hospitals serving patients even other than COVID-19 to avail this facility. Refinance facility will be available for setting up or expansion of the existing hospitals fulfilling minimum specified standards. For setting up new hospitals under this scheme, payments will be released by the banks on completing relevant milestones.

    Circular:

    http://www.sbp.org.pk/smefd/circulars/2020/CL16.htm


    Enhanced financing limit of Rs.500 mn for single hospital.

    On 1st May 2020, SBP enhanced the financing limit of a single hospital/medical center under its Refinance Facility from Rs 200 mn to Rs 500 mn to strengthen health sector in fight against COVID-19. Financing under this facility is being made available by SBP at 0% to banks that can charge a maximum rate of 3% per annum to hospitals/medical centers.

    Circular:
    http://www.sbp.org.pk/smefd/circulars/2020/CL8.htm

    Earlier, SBP announced a "Refinance Facility for Combating COVID-19 (RFCC)"and its Shariah compliant version to support hospitals and medical centers in combating the spread of COVID-19. Under this scheme, the SBP will refinance banks to provide financing at a maximum end-user rate of 3 percent for 5 years for the purchase of equipment to detect, contain and treat the Coronavirus. The SBP will provide this facility to banks at 0 percent. All hospitals and medical centers registered with federal or provincial health agencies and which are engaged in the control and eradication of COVID-19 will be eligible for this facility.

    The total size of the scheme is Rs5 billion, with a maximum financing limit per hospital or medical center of Rs200 million. This scheme will help contain the spread of the Coronavirus and reduce its human toll. It is available until end-September 2020.


    Circulars:

    Conventional:
    http://www.sbp.org.pk/smefd/circulars/2020/C3.htm

    Islamic:
    http://www.sbp.org.pk/smefd/circulars/2020/C4.htm

    Advance Payments for medical equipment and medicines allowed.

    SBP has allowed all federal and provincial government departments, hospitals in public and private sectors, charitable organizations, manufacturers and commercial importers to make Import Advance Payment and Import on Open Account, without any limit, for the import of medical equipment, medicines and other ancillary items for the treatment of COVID-19. Further, the banks have been allowed to approve Electronic Import Form (EIF) for import of the equipment, donated by international donor agencies and foreign governments to facilitate their seamless and speedy imports.

    Circular:
    http://www.sbp.org.pk/epd/2020/FECL9.htm

    More flexibility allowed to hospitals & medical centres under Refinance Facility

    On 6 April 2020, SBP further facilitated the health sector by allowing financing against existing equipment and purchase of refurbished equipment for creating special facility/isolation ward to deal with COVID-19. Moreover, maximum coverage of 60% of civil works for setting up separate /isolation facility has also been enhanced to 100%.

    Circular:
    http://www.sbp.org.pk/smefd/circulars/2020/CL6.htm

    Ensuring the Availability and Continuity of Financial Services (Updated on 28 May, 2020) 

    SBP is continuously engaged with the industry to understand issues and challenges and formulate a policy response accordingly. In this vein, SBP conducted a flash survey covering all banks, Development Financial Institutions (DFIs) and Micro Finance Banks (MFBs). The survey results show that the industry has started to take preventive measures to limit the adverse repercussions of COVID-19. However, the results also indicate diversity among the industry participants in terms of their readiness to handle any worst-case scenario.

    Banks/DFIs/MFBs were advised to adopt the following measures to help fight the spread of COVID-19 to ensure availability of uninterrupted financial services:

    1. Create awareness amongst the banks/DFIs/MFBs' staff and customers regarding COVID-19;

    2. Implement the guidelines issued by the World Health Organization, the Government of Pakistan and the Provincial Governments, in letter and spirit, to ensure the safety and health of employees and cleanliness at the workplace;

    3. Take precautionary measures such as enhanced usage of cash counting machines, encouraging customers to use Alternate Delivery Channels (ADCs) etc. to reduce contact with currency notes and other financial instruments. Further, make elaborative arrangements to provide uninterrupted financial services through ADCs (e.g. ATMs, online banking, transactions through call centers etc.);

    4. Reassess Business Continuity Plans (BCPs) in the existing situation and develop suitable remedial plans, including allocation of human and other resources, for their effective implementation;

    5. Carry out an impact analysis to assess the consequences on business and operations and enhance the monitoring frequency of key risk areas like credit, capital market and foreign exchange exposures; and

    6. Reach out to the key payment and settlement system partners such as NIFT, 1Link, NCCPL and CDC to ensure continued availability of their services.

    In order to implement the above instructions and take other necessary measures, banks/DFIs/MFBs' have been advised to form a senior level committee to ensure that the responses towards risks arising out of COIVID-19 are robust and adequate.

    Circular:
    http://www.sbp.org.pk/bprd/2020/CL6.htm

    Continuous availability of ATMs

    will be ensured by keeping them up and running 24/7 by the banks. Banks' call centers and helplines must also be operative 24/7 and timely resolution of the complaints shall be ensured.

    Critical functions and systems of banking will remain available.

    All critical functions and systems required to provide banking services, including Real Time Gross Settlement System (RTGS) will remain available as usual even during the lock downs. Large scale closure of branches may cause rush and congestion in the operative branches, which may be counterproductive to efforts to contain the spread of the disease. The banks may, however, close branches where staff is infected and for which requisite human resource is not available. The situation will be reviewed again in couple of days based on the customers' visit to branches during lock downs.

    Minimal staff at Banks.

    SBP, from 24th March 2020, has invoked a scenario wherein minimal staff will be present at its premises to undertake critical functions, whereas the rest of the staff has been allowed to work from home. The Banks can also make such arrangements both in their branches and Head/Regional offices. Further, the banks may start their branch operations from 10 a.m. if needed to better facilitate their clients.

    Circulars:
    http://www.sbp.org.pk/bprd/2020/CL8.htm
    http://www.sbp.org.pk/bprd/2020/CL16.htm
    http://www.sbp.org.pk/bprd/2020/CL17.htm
    http://www.sbp.org.pk/bprd/2020/CL18.htm
    http://www.sbp.org.pk/bprd/2020/CL24.htm
    http://www.sbp.org.pk/bprd/2020/CL32.htm
    http://www.sbp.org.pk/bprd/2020/CL33.htm

    NADRA Verisys in place of Biometric Verification (BMV) will be used along with other measures for verification purpose until June 30, 2020. However, after the lapse of this timeline, MFBs shall resume biometric verification with revised timelines of July 31, 2020 and September 30, 2020 for customers assigned medium and normal priorities, respectively.MFBs are encouraged to introduce as early as possible electronic account opening forms/ other forms along with electronically acquiring and keeping on record information required under AML/ CFT Regulations for MFBs.Moreover, it is apprised that NADRA has extended the validity period of the National Identity Cards with expiry date after September 01, 2019, and these shall be deemed valid till July 01, 2020. MFBs are advised to disseminate the contents of NADRA's notification down the line to all relevant staff.

    Circular:
    http://www.sbp.org.pk/acd/2020/CL3.htm
    http://www.sbp.org.pk/acd/2020/CL6.htm

    Clearing of Cheques made easier and faster. In a bid to limit person-to-person interactions and to provide ease of services to the customers, in the backdrop of COVID-19, Banks and MFBs are allowed to provide Direct Cheque Deposit Facility under which a crossed cheque may be presented by payee/beneficiary directly into paying/drawee bank, instead of their bank branches as per existing practice. In this way funds may be transferred by the paying/drawee bank either through RTGS of Interbank fund transfer functionality. Moreover, Banks/MFBs may also make arrangements to collect cheque from registered addresses of their customers upon their request or customers may drop their cheques in drop boxes of their Banks, installed in selected branches.

    In case of complete lock down, Corporates/Priority customers of banks may send the scanned image of their cheque along with relevant details of the beneficiary either through registered emails or through mobile applications of their banks to push funds from their accounts to the payee bank. However, banks are encouraged to implement additional risk mitigation measures as per their internal policies while offering these services to their customers. Banks/MFBs may also make arrangements with the Clearing House (NIFT) for clearing their cheques through Image Based Clearing (IBC) functionality as per the agreed SOPs between NIFT and banks.


    Circular:
    http://www.sbp.org.pk/psd/2020/C4.htm

    Banks to adopt more robust Cybersecurity measures. Only authorized users of financial institutions will access internal IT resources. They will also ensure that their cybersecurity policies cater to risks of spying, interception, and modification.Banks have also been tasked to establish dedicated Cyber Threat Intelligence Units (CTI-U) and Emergency Response Teams (ERTs) to minimize and control the damage resulting from cybersecurity incidents. They will also exercise caution in handling emails with suspicious/work-related subject line, attachment, or hyperlink especially those related to recent phenomenon related to COVID-19.

    Circular:
    http://www.sbp.org.pk/psd/2020/C3.htm

    Availability of helpline & warning against fraudsters calling for personal information.We have taken additional measures to facilitate bank customers that are faced with extraordinary challenges amid COVID-19 situation. They can now approach SBP Helpline at 021-111-727-273 if their queries or complaints are not being responded by banks.

    We have also advised the banks to protect their employees and customers and ensure work place safety by implementing guidelines of World Health Organization, Government of Pakistan and the Provincial Governments in letter and spirit. In case bank employees and customers still face difficulties or have concerns over safety arrangements, they may bring this to our notice by emailing at [email protected]

    Furthermore, public is advised not to disclose any personal or account information about their bank accounts or credit/debit cards on incoming calls or messages by fraudsters citing situation under COVID-19. Details of such calls or messages may be reported to SBP Helpline at 021-111-727-273 or emailed at [email protected]


    For details:
    http://www.sbp.org.pk/press/2020/Pr-06-Apr-20.pdf

    Promoting Digital Payments (Updated on 24 March, 2020) 

    Given the pivotal role of financial sector in providing services to the general public and particularly the businesses, SBP after consultation with stakeholders has instructed banks to take specific measures to provide their services seamlessly taking due care of reducing the risk exposure amid corona virus. The objective of these measures is to reduce the need for visiting bank branches or the ATMs and to promote use of Digital Payment Services such as internet banking, mobile phone banking etc.

    Charges on fund transfers waived.

    SBP has instructed banks to waive all charges on fund transfers through online banking channels such as Inter Bank Fund Transfer (IBFT) and SBP's Real Time Gross Settlement System for customers. Thus people can transfer money through mobile phones or internet banking avoiding the need to visit a bank branch or an ATM without incurring any cost. They will also not incur any cost in case of using ATMs or visiting bank branches for transferring large amounts and can avoid the use of cash. Banks have been advised to facilitate their customers in using online banking while taking all necessary precautions to ensure the safety and security of customer's funds. Further, they will also ensure that call centres/helplines are available 24/7 for instant customer support.

    Banks to facilitate education fee and loan repayments.

    Financial industry has been instructed to immediately facilitate education fee and loan repayments through internet banking or mobile devices. Financial institutions shall also run awareness campaigns through different channels to educate customers to use internet banking or mobile phones, limit use of currency notes and restrict branch visits. Anticipating any frauds in the wake of digital transactions, SBP has advised financial industry to increase vigilance on digital channels and increase monitoring on cyber threats.

    Circular:
    http://www.sbp.org.pk/psd/2020/C2.htm

    Relaxing Credit Requirements for Exporters and Importers (Updated on 24 March, 2020) 

    SBP has a strategic objective to support exports for sustained improvement in Pakistan's balance of payments and growth. To this end SBP provides refinance to banks to provide cheap credit at interest rates that vary between 3 to 6 percent to exporters for working capital and new projects under Export Finance Schemes (EFS) and Long Term Financing Facility (LTFF) schemes. The total subsidized credit to exporters outstanding under both these schemes is currently approximately Rs. 660 billion. Due to the COVID-19 pandemic Pakistan's exporters are facing declining demand in overseas markets and problems in executing existing orders. To support exporters in these circumstances and to prevent current liquidity problems from turning into solvency problems amongst exporters, SBP has announced following several measures today.

    Relaxation in matching amount.

    Availing cheaper credit under EFS is linked with the export performance. Currently, exporters are required to export twice the amount of borrowed funds. In case of failure in meeting the requirement penalties are imposed and the credit limit for the next year is also reduced accordingly. SBP has reduced the performance requirement from twice to one-and-a-half times that will be effective for the current year as well as for FY21.

    Extension in time period to meet performance requirements.

    Exporters were required to show performance under the EFS schemes by end-June 2020. This period has been extended by 6 months to end Dec. 2020. Since the additional period will also be counted towards setting new limits, this will help the exporters in availing higher limits for FY21.

    Extension in time period to ship goods.

    Exporters availing the subsidized credit schemes are required to ship their goods within 6 months of availing credit under EFS. In case of failure, penalties are imposed. This period has been extended from six to twelve months. Therefore, exporters will not be liable to pay penalties due to breach of this condition during January to June 2020.

    Relaxation in conditions for Long Term Financing Facility.

    Exporters who want to avail credit under Long Term Financing Facility (LTFF) are required to have exports worth 50 percent, or USD 5 million, of the total sales to become eligible. This limit has been reduced to 40 percent or USD4 million for all the borrowings under LTTF during the period January 01, 2020 to September 30, 2020. Moreover, under the requirement of annual projected exports performance for four years to avail LTFF for new or BMR projects has been extended by another one year. Now the projected exports performance will be measured in 5 years.

    Circular:
    http://www.sbp.org.pk/smefd/circulars/2020/C5.htm

    Realization of export proceeds.

    Another major relaxation has been provided to the exporters on foreign exchange side. Keeping in view the difficulties faced by the exporters, SBP has also allowed banks to enhance the time period for realization of exports proceeds from existing requirement of 180 days to 270 days on a case by case basis where the delay is related to COVID-19. This would help exporters to provide extended time to their buyers in making payment due to above pandemic. Likewise, to facilitate importers, SBP has extended the time period for import of goods into Pakistan against advance payment from existing requirement of 120 days to 210 days.

    Circular:
    http://www.sbp.org.pk/epd/2020/FECL7.htm

    Exporters can directly dispatch the shipping documents.

    SBP has allowed exporters to directly dispatch the shipping documents of their exports' consignment to their foreign buyers without any limit, subject to condition that the exporter's export over-dues are less than one percent and the exporter has exports of at least USD 5 million during the previous three years. Earlier, exporters could dispatch the shipping documents directly to their foreign buyers for export consignments of up to USD 100,000/, or equivalent in other currencies. This limit was in place since 2017.

    Circular:
    http://www.sbp.org.pk/epd/2020/FECL5.htm

    Limits on advance payments for imports increased.

    Moreover, SBP has enhanced the existing limit of USD 10,000/, or equivalent in other currencies, per invoice allowed to banks to make advance payment on behalf of manufacturing & industrial concerns and commercial importers for import of raw material, spare parts and machinery, to USD 25,000/.

    These measures are in continuation of facilitating export-oriented industries and manufacturing concerns in the backdrop of ease of doing business and promoting exports' growth and will further contribute in improving economic outlook of the country.

    It is pertinent to mention here that in January 2020, SBP had taken certain measures to facilitate export-oriented industries and manufacturing concerns. These included:

    1. Extending the facility to make advance payment up to USD 10,000/, or equivalent in other currencies, per invoice, for import of raw material, spare parts and machinery to commercial importers as well in addition to manufacturing & industrial concerns, allowed earlier.

    2. Allowing Authorized Dealers to effect import advance payment against irrevocable letter of credit, up to 100% of the value of letter of credit, for import of plant, machinery, spare parts and raw material etc. on behalf of manufacturing concerns for their own use only.

    3. Extending the facility allowed to manufacturing & industrial concerns for import of raw materials and spare parts on open account basis to commercial importers as well.


    Circular:
    http://www.sbp.org.pk/epd/2020/FECL4.htm

    Facilitating New Investment (Updated on 08 May, 2020) 

    SBP allows financing for BMR and expansion under its Temporary Economic Relief Facility (TERF)

    On 8 May, 2020, SBP took this measure to provide further stimulus to the economy in the context of COVID-19's impact on the economy, to support investment in the country for modernizing or expanding manufacturing / production units, and in response from feedback from stakeholders.

    While allowing BMR and expansion of existing projects, SBP has allowed financing for purchase of new imported and locally manufactured plant and machinery against foreign LC and inland LC. The funding under the facility cannot be used for procurement of second-hand machinery, land or carrying out civil works. Further, SBP has also introduced additional internal and external checks and controls to ensure proper utilization of funds.

    Circular:
    http://www.sbp.org.pk/smefd/circulars/2020/CL9.htm

    Earlier, SBP announced TERF and its Shariah compliant version to stimulate new investment in manufacturing. Under this scheme, the SBP will refinance banks to provide financing at a maximum end-user rate of 7 percent for 10 years for setting up of new industrial units. The total size of the scheme is Rs 100 billion, with a maximum loan size per project of Rs 5 billion. It can be accessed by all manufacturing industries, with the exception of the power sector, where an SBP refinance facility for renewable energy projects already exists.

    In line with the SBP's other refinancing schemes, the credit risk will be borne by banks and the selection of projects to finance will also be determined by them. This scheme will help counter any possible delays in the setting up of new projects that investors were planning prior to the Coronavirus outbreak. It will be available for one year only, requiring a letter of credit (LC) to be opened by end-March 2021.


    Circulars:

    Conventional:
    http://www.sbp.org.pk/smefd/circulars/2020/C1.htm

    Islamic:
    http://www.sbp.org.pk/smefd/circulars/2020/C2.htm

    Provision of disinfected currency notes by banks (Updated on 04 June, 2020) 

    In addition to the precautionary measures, social distancing SOPs/ guidelines already issued by the GoP/ WHO; banks are advised to mandatorily comply with the following operational guidelines, with immediate effect:

    1. The commercial bank/CIT interested in deposit/withdrawal of cash from SBP BSC shall coordinate with respective SBP BSC field office(s) and seek the time to visit the office for the purpose. The bank/CIT will be allowed access in the SBP BSC premises only at the time allocated to them.

    2. Commercial bank/CIT shall ensure minimum/efficient deployment of staff for cash deposit/ withdrawal from SBP BSC Offices, in order to mitigate spread of the COVID-19 virus.

    3. Wearing of face masks, latex gloves is mandatory for bank representatives / CIT staff entering SBP BSC premises. Similarly, while entering the Bank’s premises temperature screening of all such visitors shall be carried out by SBPs’ security officials.

    4. Commercial bank representatives / CIT staff exhibiting symptom(s) including but not limited to coughing, sneezing, fever etc; shall not be engaged in cash handling/storage/transportation. While screening at SBP BSC, if any of the bank /CIT staff exhibits any of the aforementioned symptoms, such individuals will not be allowed to enter SBP BSC office(s).

    5. Commercial bank representatives / CIT staff to ensure compliance of all preventive measures related to social distancing including guidelines issued by the Government of Pakistan and WHO, while present in SBP BSC premises.

    6. It should be ensured that banknote deposits (all denom) are shrink-wrapped in accordance with the Banknote Packing Instructions, as the same shall be disinfected before deposit in SBP BSC vault.

    7. Furthermore, commercial banks/CITs shall adopt similar practices / precautionary measures during interbank/intra-bank cash dealings.

    8. Commercial banks/CIT companies are encouraged to facilitate testing of all employees suspected of contracting COVID-19 to present the image of a socially responsible institution.

    Circular:
    http://www.sbp.org.pk/cmd/2020/C_2.pdf

    Earlier, recognizing the need for issuance of fit, authenticated and disinfected cash by the banks, detailed instructions were provided by SBP to ensure to clean, disinfect, seal and quarantine all cash being collected from hospitals and clinics and to block circulation of such cash in the market. The banks shall report daily collection of cash from hospitals to SBP, which shall credit bank's accounts for the amounts so quarantined by them. Further, arrangements are being made to provide sufficient fresh or disinfected cash to banks enabling them to issue fresh cash or the re-issuable cash that remained in quarantine for at least fifteen (15) days to their clients. Banks have been ensured that SBP has sufficient quantity of such cash, and it would meet all demands for such cash.

    Circular:
    http://www.sbp.org.pk/acc/2020/C1.pdf

    Extension in Deadline for Applications (Updated on 17 April, 2020) 

    The deadline has been extended for positions advertised on March 1, 2020, March 8, 2020, March 15, 2020 and March 22, 2020. Other terms and conditions will remain the same.

    For details:
    http://www.sbp.org.pk/careers/status.asp


     
           
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