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  • SBP issues revised features of PM’s youth business loan

    SBP issues revised features of PM’s youth business loan

    KARACHI: State Bank of Pakistan (SBP) on Friday issued revised features of Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme.

    The SBP said that the government had approved revision in key features of loan program under Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme.

    The revised features of the scheme as approved by the government are reproduced below:

    S. NoParticularsKamyab Jawan Program

    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 and medium 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 or equivalent education will be required.  

    2
      Loan size    		  Size of the loan is segregated into three tiers, as under:
    Tier 1 (T1) loans- Rs 100,000 to Rs. 1 million
    Tier 2 (T2) loans- Above Rs 1 million and upto Rs 10 million Tier 3 (T3) loans-Above Rs 10 million and upto Rs 25 million


    3
     Loan type    		  Long Term Loan for Machinery and Equipment / Working Capital Loan/ Running Finance, and Leasing of Business on wheels on 2/3/4 wheel locally manufactured vehicles.
    4 Loan TenorUpto 8 years with maximum grace period of upto one year.

    5
      Debt: Equity ratio    		  For New Businesses:
    Tier 1 – 90:10
    Tier 2 & 3 – 80: 20
    For Existing Businesses:
    Nil for all tiers
    The Borrower’s contribution of equity would be in the form of cash or immovable property and will be required after approval of loan.

    6 Focus on Women25% 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 & T3 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 20%
    T3 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 banks by the SBP on quarterly basis.

    10
      Pricing    		  Pricing for Working Capital & Term Loans: Product Customer Pricing Bank Pricing Tier 1 3% KIBOR+400 BPS Tier 2 4% KIBOR+400 BPS Tier 3 5% KIBOR+400 BPS
    11 Executing AgencyAll Commercial, Islamic and SME banks are advised to come on board.
    12 Sectors and ProductsAll sectors and products including agriculture.

    13
      Application Form    		  The Form would be both in English and Urdu and require minimum essential information with simple format available on Government provided Kamyab Jawan portal. The processing time will not exceed 30 days and will be stated clearly in the application form. Non-refundable form processing fee will be Rs. 100/- inclusive of NADRA online CNIC verification fee.

    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.

    15
     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 loan for existing businesses, a robust independent verification mechanism may be introduced to ensure proper utilization of loans. Further, for new businesses, a robust mechanism for ongoing monitoring of the loans’ utilization should be developed and implemented. All loans previously disbursed or approved under this scheme will be converted into the new parameters with effect from July 01, 2020.

    The SBP directed the banks to gear up their systems for successful implementation of this scheme and to avoid any misuse of the scheme. Eligible borrowers may apply for the loans immediately after formal launch of the scheme by the Prime Minister’s Office.

  • Pakistan’s foreign exchange reserves increase by $819 million

    Pakistan’s foreign exchange reserves increase by $819 million

    KARACHI: The liquid foreign exchange of the country increased by $819 million to $18.79 billion by week ended July 03, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $17.971 billion a week ago ended on June 26, 2020.

    The official reserves held by the SBP increased by $811 million to $12.042 billion by week ended July 03, 2020 as compared with $11.231 billion a week ago.

    The SBP attributed the increase in reserves to proceeds of $1,000 million as GOP loan disbursement from China.

    During the week, SBP also made government external debt payments of $ 231.2 million.

    The foreign exchange reserves held by commercial bank witnessed nominal growth of $8 million to $6.748 billion by week ended July 03, 2020 as compared with $6.74 billion a week ago.

  • SBP revises banking timings from July 13

    SBP revises banking timings from July 13

    KARACHI: State Bank of Pakistan (SBP) on Thursday revised timings for banks and microfinance banks to be observed from July 13, 2020.

    The central bank said that effective from July 13, 2020, the banks/MFBs shall observe the following office timings till further orders.

    However, banks/MFBs may prescribe business hours for branches as per their business requirement subject to observance of SBP business (banking) hours for public dealings as notified vide BPRD Circular Letter No. 20 dated April 23, 2020.

    The timings shall be:

    Monday to Thursday: 09:00 a.m. to 5:30 p.m. (with prayer / lunch break from 1:30 p.m. to 2:00 p.m.)

    Friday: 09:00 a.m. to 5:30 p.m. (with prayer / lunch break from 1:00 p.m. to 2:30 p.m.)

    The SBP said that all banks / MFBs are accordingly advised to ensure compliance of the above-mentioned timings in letter and spirit.

  • SBP asks banks not to accept institutional investment in saving schemes

    SBP asks banks not to accept institutional investment in saving schemes

    KARACHI: State Bank of Pakistan (SBP) on Thursday informed banks about restriction imposed on institutional investment in saving schemes.

    The central bank said that the Central Directorate of National Savings (CDNS) on July 01, 2020 restricted participation of institutional investors in national saving schemes.

    In this connection, the SBP advised all authorized commercial banks to review the instructions contained in the above mentioned letters and ensure that no institutional investment of any kind should be accepted in National Savings Schemes (NSS) dealt by banks i.e. Special Savings Certificate (SSC) / Defence Savings Certificate (DSC) on or after July 01, 2020.

    The SBP asked the banks to disseminate necessary instructions down the line to all authorized branches and concerned officials for information and strict compliance.

  • SBP slashes refinance rate to five percent for temporary, long term schemes

    SBP slashes refinance rate to five percent for temporary, long term schemes

    KARACHI: State Bank of Pakistan (SBP) has decided to reduce the mark up rates on temporary economic refinance facility (TERF) to five percent from 7 percent and on long term financing facility (LTFF) from non-textile sector to five percent from six percent.

    The central bank on Wednesday said that taking cognizance of the negative fallout of COVID-19 Pandemic for the economy, SBP has been constantly taking steps to safeguard the businesses and households and a reduction in the policy rate has been a key step since March 2020.

    SBP has reduced the policy rate by 625 basis points since 17th March, 2020 to 7 percent.

    To extend the benefits of this reduction in the policy rate to the users of its refinance schemes, SBP has now decided to align the end user markup rates on two of its refinance schemes for promoting investment in the country.

    Temporary Economic Refinance Facility (TERF): SBP introduced this facility to provide stimulus to the economy by supporting new investment and balancing, modernization and restructuring (BMR) of the existing projects.

    To further improve the incentive under the scheme, SBP has lowered the end user mark-up rates from existing 7 percent to 5 percent.

    SBP will now be providing refinance to banks at 1 percent with banks’ maximum margin of 4 percent. Further, SBP has also allowed the TERF facility in cases where LCs/Inland LCs were opened prior, but retiring after the introduction of the scheme on March 17, 220.

    These measures, in the backdrop of earlier policy action of allowing BMR under TERF, are expected to further support the economic activity, new long term investment and employment generation.

    Under this scheme, up till 2nd July 2020, Rs10.5 billion have been approved by banks for 21 projects.

    Long Term Financing Facility (LTFF): LTFF is one of the oldest refinance schemes of SBP under which financing is available for export-oriented projects for purchase of imported and locally manufactured new plant and machinery.

    In March, 2020 SBP opened the LTFF to all sectors across the board. Earlier the end user markup rate under this scheme were 5 percent for textile sector and 6 percent for non-textile sectors.

    State Bank has now reduced its refinance rate for non-textile sector by 1 percent and therefore the end user rate for all sectors across the board will be 5 percent.

    It is expected that the above measures will help facilitate long term investment in both domestic and export market.

  • Bank deposits reach record high at Rs16.23 trillion

    Bank deposits reach record high at Rs16.23 trillion

    KARACHI: The deposits of banking systems have reached record high at Rs16.23 trillion by end of June 30, 2020, according to data released by State Bank of Pakistan (SBP) on Tuesday.

    The deposits of baking system registered 12.24 percent growth by end of June 2020 as compared with Rs14.46 trillion by end of same month last year.

    Analysts at Topline Securities explained that during second quarter of 2020, the deposits have increased by higher-than-largely-expected 7 percent, as Net Domestic Assets (NDA) of the Banking System increased by 6 percent during this period, on the back of 11 percent increase in the government borrowings for budgetary support.

    Investments have grown by 40 percent YoY and 3 percent MoM to Rs10.68 trillion by end June 2020. The same is up 21 percent YTD (vs. 6 percent YTD growth by end March 2020).

    As a result, IDR has increased to 66 percent in June 2020 from 53 percent in June 2019 and 61 percent in March 2020.

    On the other hand, Advances have grown by just 1 percent YoY, and have actually declined by 2 percent MoM in June 2020 despite the aggressive cuts in interest rates by the Pakistan Central Bank since March 2020.

    This is due to the impact of the pandemic COVID-19, which has caused the overall slowdown in the economic activity. In YTD 2020, advances are up 1 percent.

    As a result, ADR has dropped to 51 percent in Jun-2020 from 56 percent in Jun-2019 and 55 percent in March 2020.

    The Currency in Circulation (CIC) has increased by 17 percent in YTD 2020 to Rs6.19 trillion, with CIC as a percentage of M2 clocking in at 31 percent, above past 5-year average of 27 percent.

    Going forward, the analysts expect deposit growth in the range of 10-11 percent during 2020 (vs. historical 3-year average growth of 11 percent), while they expect advances to grow by around 5 percent during the year (vs. historical average 3-year growth of 14 percent).

  • SBP extends deferment of principal amount facility till September 30

    SBP extends deferment of principal amount facility till September 30

    KARACHI: State Bank of Pakistan (SBP) has decided to extend the deferment of principal amount facility up till September 30, 2020, a statement said on Tuesday.

    The central bank said that considering the fact that COVID-19 pandemic is continuing to stress the cash flow of small and medium sized businesses and households, SBP has decided to extend the Deferment of Principal Amount facility up till September 30, 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.

    It is expected that more businesses and households, who were not able to avail the facility, will benefit from this extension.

    On March 26, 2020, amid growing concerns about the potential economic impact of the COVID–19 pandemic, SBP with the collaboration of Pakistan Banks Association (PBA) announced a comprehensive set of measures to help businesses and households to manage their finances.

    Among these, a key measure was the deferment of principal amount of loans and advances by banks and DFIs.

    Under this facility, businesses and households could request for the deferment of their loans and advances for a period of one year, albeit continuing to service the mark-up amount.

    The measure also ensured that the deferment of principal will not affect borrower’s credit history and such facilities will not be reported as restructured/rescheduled in the credit bureau’s data.

    This measure proved extremely helpful for borrowers and is evident from the fact that up till 3rd July 2020, banks deferred Rs593 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.

  • Government borrowing from commercial banks rises to Rs2,413 billion in 2019/2020

    Government borrowing from commercial banks rises to Rs2,413 billion in 2019/2020

    KARACHI: The federal government has borrowed Rs2,413 billion from commercial banks during fiscal year 2019/2020 as against retirement of Rs771.6 billion in the preceding fiscal year, according to statistics released by State Bank of Pakistan (SBP) on Monday.

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  • SBP expands refinance facility for health sector to combat COVID-19

    SBP expands refinance facility for health sector to combat COVID-19

    KARACHI: The State Bank of Pakistan (SBP) on Monday expand the refinance facility at lower rates for health sector in order to combat COVID-19.

    On March 17, 2020, SBP introduced a refinance scheme, titled Refinance Facility to Combat Covid-19 (RFCC), to support the hospitals and health sector for providing services to directly fight against Covid-19.

    Under this scheme, banks provide concessional loans at a maximum end-user rate of 3 percent for 5 years for hospitals and medical centers to purchase medical equipment and set up isolation wards for developing capacity and supporting the health sector in fight against COVID-19.

    Since its inception up till 2nd July 2020, Rs 6.4 billion of concessional credit have been approved for hospitals and other eligible facilities to fight COVID-19.

    Keeping in view the encouraging response and the potential to help developing the health facilities in the country, SBP has now expanded the scope of this refinance facility further.

    The scheme now allows 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.

    RFCC is highly subsidized facility where SBP provides refinance to banks at 0% whereas banks can keep a maximum margin of 3%. Some of the banks treating this as part of their CSR are keeping margins very low.

  • Pakistan’s weekly foreign exchange reserves increase by $1.24bn

    Pakistan’s weekly foreign exchange reserves increase by $1.24bn

    KARACHI: The foreign exchange reserves of the country increased by $1.24 billion to $17.97 billion by week ended June 26, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $16.73 billion by week ended June 19, 2020.

    The official foreign exchange reserves of the SBP increased by $1.27 billion to $11.231 billion by week ended June 26, 2020. The official reserves of the central bank were at $9.961 billion a week ago.

    The SBP said that during the week ended June 26, 2020, the central bank received around $2,046 million official inflows, including $737 million from World Bank, $503 million from Asian Development Bank, $500 million from Asian Infrastructure Investment Bank and $300 million as GOP loan disbursement from China.

    After incorporating government external debt payments of $ 809 million, SBP reserves increased by $ 1,270 million to $ 11,231 million.

    During the current week, SBP has received additional $1,000 million as GOP loan disbursement from China.

    These funds will be part of SBP weekly reserves data as of July 03, 2020 to be released on July 09, 2020.