Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular No. 08 of 2019
July 11, 2019

The Presidents/CEOs,
All Banks

Prime Minister's Kamyab Jawan SME Lending Program

Dear Sir/Madam,

  1. Small enterprises stimulate economic growth by providing employment opportunities, fostering innovation and reducing income inequalities. Lack of adequate financing facilities from formal sources is one of the key challenges faced by the small enterprises and youth entrepreneurs. Government of Pakistan, is cognizant of this situation and is fully committed to enable youth to avail affordable financing from banks for establishing new business or strengthening their existing business.

  2. In order to provide self-employment opportunities to unemployed youth, Government of Pakistan is launching Prime Minister’s Kamyab Jawan SME Lending Program across the country. Government of Pakistan shall provide mark-up and credit loss subsidy on small business loans in the range of Rs. 100,000 to Rs. 5,000,000 disbursed by banks under the program. The key features of the Program as approved by the Prime Minister are reproduced below:

    S. No Particulars Key Features
    1 Eligibility Criteria

    All men/women holding CNIC, aged between 21 and 45 years with entrepreneurial potential are eligible. For IT/ E-Commerce related businesses, the lower age limit will be 18 years.

    Small enterprises (startups and existing businesses) as per definition of SBP and owned by youth as per above mentioned age brackets are also eligible.

    For IT/E-Commerce related businesses, at least matriculation and/or experience of at least six months.



    Loan size

    Size of the loan is segregated into two tiers, as under:
    Tier 1 (T1) loans- Rs 100,000 to Rs. 0.5 million
    Tier 2 (T2) loans- Above Rs 0.5 million and upto Rs 5 million
    3 Loan type
    Working capital loans and term loans
    4 Loan Tenor
    Upto 8 years with maximum grace period of upto one year.
    5 Debt to Equity ratio
    T1 loans- 90:10
    T2 loans- 80: 20
    The borrower's contribution of equity would be in the form of cash or immovable property and will be required after approval of the loan.
    6 Focus on Women
    25% of the loans will go to women borrowers.
    7 Security Requirements
    Security arrangements will be as under:
    T1 loans: Clean, however, only personal guarantee of the borrower
    T2 loans: As per bank’s own credit policy
    8 Risk Mitigation
    Government will bear credit losses (principal portion only) on the disbursed portfolio of the banks as under:
    T1 loans: Upto 50%
    T2 loans: Upto 10%
    9 Allocation in Budget
    Finance Division shall allocate funds in each fiscal year’s budget as per estimates provided by SBP. Payment will be made on submission of consolidated claims of all the banks by the SBP.
    10 Pricing
    Pricing for Working Capital & Term Loans:
    T1 loans: 6% p.a. fixed for borrower. Government will pay the difference of the cost at KIBOR+500bps
    T2 loans: 8% p.a. fixed for borrower. Government will pay the difference of the cost at KIBOR+400bps
    11 Executing Agency
    In the first instance, National Bank of Pakistan (NBP), Bank of Punjab and Bank of Khyber will execute the program under the guidance and supervision of State Bank of Pakistan. Subsequently, SBP will also advise other commercial banks for participation in the program.
    NBP will continue to play the lead role. NBP’s share in total disbursed loans will be upto 50%.
    12 Sectors and Products
    All sectors. Standardized schemes/ projects/ undertakings designed by SMEDA, or projects designed by private sector service providers or by individuals, themselves will also be admissible.
    13 Application Form
    The Form would be both in English and Urdu and require minimum essential information with simple format.
    The processing time will not exceed 15 days and will be stated clearly in the application form.
    The forms would be readily available both in branches and through dedicated websites of the banks. Non-refundable form processing fee will be Rs. 100 (Rupee One Hundred Only).
    14 Monitoring
    SBP will publish consolidated information about the loans extended under this program for information of the public on quarterly basis on its website.

    Geographical distribution

    Whole of Pakistan. In case of Balochistan, at least one branch of NBP will be designated per Division. All non-designated NBP branches will also provide and receive filled application forms and dispatch them to the nearest branches.
    16 Additional measures
    Executing Agencies (EAs) under this program should ensure following additional measures:
    Criteria for assessing entrepreneurial potential should be developed and implemented.
    In case of loans for existing businesses, a robust independent verification mechanism may be introduced to ensure proper utilization of the loans. Further, for new businesses, a robust mechanism for ongoing monitoring of the loans’ utilization should be developed and implemented
    A mechanism must be introduced to ensure that the prescribed debt equity ratio has been maintained. Before disbursement of the loans, it should be ensured that the equity is deposited in the bank from the borrower’s own sources where the equity mechanism is in the form of cash.

  3. The banks are advised to gear up their systems for successful implementation of this program and to avoid any misuse of the program.

  4. Loan Application Forms will be available both in branches and through dedicated websites of National Bank of Pakistan, Bank of Punjab and Bank of Khyber. The standard loan application form is enclosed at Annexure-1. The banks are advised to mention their toll free number in the loan application form for the facilitation of youth entrepreneurs. Eligible borrowers may apply for the loans immediately after formal launch of the program by the Prime Minister.

  5. The banks are also advised that with the launch of Prime Minister's Kamyab SME Lending Program, Prime Minister’s Youth Business Loan (PMYBL) scheme would cease to exist.


    1. Annexure -1: Loan Application Form

Yours sincerely,


(Ghulam Muhammad)


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