Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular Letter No. 07 of 2020
April 22, 2020

The Presidents/CEOs,
All Banks/DFIs

Dear Sirs/Madams,

1. Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns
2. Islamic Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns

Please refer to IH&SMEFD Circular No. 06 and 07 of 2020 dated April 10, 2020, whereby, State Bank of Pakistan’s Refinance Schemes on the captioned subject were announced. With an aim to facilitate the business concerns further in availing the subject refinance facilities, following amendments have been made:


SBP refinance rate/service charges have been reduced to 0% for all types of eligible borrowers that are on Active Tax Payers List. The maximum spread allowed to the PFIs on their financing to such borrowers will, therefore, be 3% p.a., with maximum end user rate of 3% p.a. However, the end user rate, for rest of the borrowers, will continue to be 5 percent with the same composition as prescribed in aforesaid Circulars.


In order to facilitate vendors/distributors who are suppliers/distributers of large corporates, Banks/DFIs are being allowed to extend financing to such vendors/distributors under the subject Schemes against corporate guarantee(s) issued on their behalf. In this regard, a vendor/distributor may also provide corporate guarantees of multiple corporates with whom the vendor/distributor has business relationships. This consideration of corporate guarantee as security will only be available for financing under the subject Schemes.


In order to facilitate PFIs in opening accounts of employees/workers of their borrowers for disbursement under the scheme, the PFIs are being allowed to open such accounts on an undertaking from the borrower stating that these persons are bonafide employees/workers along with photocopies of their CNICs, postal addresses and cell numbers. These accounts will solely be used for crediting salaries/wages and debits there against. PFIs will ensure NADRA Verisys before activation of such accounts. These accounts can be used as normal accounts once PFIs comply with relevant SBP's AML/CFT Instructions.


In partial modification of clause 2.e/1.2.f, of above mentioned circulars, a customer having multiple banking relationship is allowed to apply to any PFI/PIBI for financing under the schemes, however, preferably the customer should approach the PFI/PIBI that is managing its payroll.


The exposure under the scheme will not be counted towards Single Obligor Exposure Limit or Group Exposure Limit prescribed under Prudential Regulations (PRs) for Corporate and Commercial Banking and PRs for Small & Medium Enterprise Financing.


In cases where the customers have applied for the financing under the scheme and before the loan applications are approved, the customers disburse salaries pertaining to the month of April 2020 through their own sources, the PFIs are allowed to reimburse such salaries/wages to the customers after the approval of their loan applications. This relaxation is, however, only available for the salaries/wages pertaining to the month of April 2020.


Banks/DFIs are encouraged to take clean exposure (facilities secured solely against borrowers’ personal guarantees) on an SME borrower up to Rs 5 million in line with SME prudential regulation R-4.


Please also find enclosed a simplified Loan Application Form, prescribed for SME borrowers, to facilitate them to apply for the loans under the schemes and also enable the banks to process their requests within the prescribed timeline of 15 days.

2. All other terms and conditions of the schemes shall remain unchanged.

Encl: Annexure I. Simplified loan application form for SME borrowers

Yours sincerely,


(Dr. Mian Farooq Haq)


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