Timeline
Monetary Easing Cycle

Scheme in Brief

The Scheme aims to prevent layoff by financing wages and salaries of employees (permanent, contractual, daily wagers as well as outsourced) for six months (April 2020-Sep 2020) for all kind of businesses except for Government entities, public sector enterprises, autonomous bodies and deposit taking financial institutions.

Features

Maximum Loan Limit

Category Wage Bill for 6 monthsLoan Limit Loan Limit  (Max)
A Less than or equal to Rs 1,000 million 100% of actual six months wage bill Rs 1,000 million
B More than Rs 1,000 million Rs 1,000 million or 75% of actual six months wage bill, whichever is higher Rs 2,000 million

Rate

(i) 3% p.a. for taxpayers (SBP refinance rate 0%)

(ii) 5% p.a. for non-taxpayers (including SBP refinance rate 2% p.a. for corporate/ commercial borrowers and 1% p.a. for SME borrowers) .

Risk Sharing Facility

60% risk sharing by Government of Pakistan for SMEs against first loss on disbursed portfolio (principal portion only) of eligible borrowers with sales turnover up to Rs 800 million and 40% risk sharing for eligible borrowers with sales turnover up to Rs 2 billion.

Repayment

(i) 8 equal quarterly installments.

(ii) The repayment of financing under the Scheme will start after a grace period of 06 months (to be counted from the date of last disbursement to business). 

Validity

September 30, 2020

Performance

Significant growth in SBP Rozgar Scheme is reflected through increase in amount under all three categories i.e. requested amount, approved amount and disbursed amount. Requested amount has increased from less than Rs 1 billion by end April, 2020 to more than Rs 276 billion by November 13, 2020 while over this period approved amount and disbursed amount have increased to Rs 238.2 billion and Rs 212.4 billion from Rs 24 million and Rs 23 million, respectively.

Mobirise

Since the introduction of Risk Sharing Facility (RSF) in Rozgar Scheme in May 2020 to Nov 13, 2020, 2603 SMEs and Small corporates with sales turnover up to Rs 2 biliion have applied for financing of Rs 69.4 billion against which Rs 56.2 billion have been approved.

Key Point

It is the most popular refinance scheme of SBP which has helped to prevent layoff of 1,677,806 employees of 2,683 businesses by November, 2020. Out of these, 382,673 employees are of 1,959 SMEs and small corporates.

Bank Wise Performance of Rozgar Scheme

Click here for report

Timeline

July 24, 2020

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

On July 24, 2020, SBP allowed disbursement of wages/ salaries for the month of July to be made before Eid-ul-Azha under its Rozgar Scheme. Further, SBP has also provided flexibility to the businesses by allowing them to avail financing from more than one bank. 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 

June 30, 2020

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

On June 30, 2020, 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. 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.

Regarding Risk Sharing Facility of Government of Pakistan (GoP) under the scheme, GoP has 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.

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

May 19, 2020

SBP allows reimbursement of wages and salaries for May-2020

On May 19, 2020, SBP allowed similar facilitation of reimbursement for the salaries of May 2020 as was allowed for the month of April in accordance to clause 1.6 of Circular Letter No. 07. Further, to facilitate those borrowers who could not apply in month of April, 2020 and paid wages & salaries of April from their own sources can also claim reimbursement provided all other terms and conditions including not laying off the employees are met.

Circular:
http://www.sbp.org.pk/smefd/circulars/2020/CL11.htm 

May 11, 2020

SBP enhances scope and financing limits under its Rozgar Scheme

On May 11, 2020, SBP further facilitated businesses with enhanced refinance limits to finance up to 100% of wages and salaries of businesses with average 3- month wage bill of up to Rs500 million. Earlier, 100% financing was available up to a wage bill of Rs 200 million only. Similarly, for businesses with 3-month wage bill exceeding Rs 500 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 Rs 500 million. Businesses that had earlier availed lower financing due to applicable limits can now avail additional financing on the basis of revised criteria.
Further, SBP has also extended the availability of its refinance scheme to non-deposit taking financial institutions as well.

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

May 06, 2020

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

In order to incentive banks to extend loans to collateral deficient SMEs and small corporates with sales turnover of up to Rs 2 billion, Federal Government on May 06, 2020 allocated Rs 30 billion under a credit risk sharing facility. Under this risk sharing arrangement, Federal Government will bear 40% first loss on principal portion of disbursed loan portfolio of the banks.

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

April 22, 2020

SBP introduces further incentives 

On April 22, 2020, SBP has introduced more incentives to the scheme
• 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.
• Mark up rate has been reduced from 4% to 3% for businesses which are active tax payers
• 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.

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

April 10, 2020

SBP introduces Refinance Scheme for Payment of Wages & Salaries to the Workers and Employees of Business Concerns

To combat the impact of COVID-19 and to help the businesses in payment of wages and salaries to their workers and employees and thereby support continued employment in this challenging environment, State Bank of Pakistan on April 10, 2020 has introduced a temporary refinance scheme and its Shariah compliant version. The scheme will finance wages and salaries of permanent, contractual, daily wagers as well as outsourced employees of existing as well as new borrowers of banks and DFIs for the months from April 2020 to June 2020. 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 at an interest rate of 4%.

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

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