The State Bank of Pakistan (SBP) has announced an incentive policy for business to prevent excessive layoffs during this period of lockdown. According to experts layoffs at this time will not only increase unemployment substantially but will also prevent industries and companies to perform at their maximum capacity after the lockdown is over.
According to the scheme offered by SBP borrowers that are on the active taxpayers list, will be able to get loans at a further reduced mark-up rate of 4 percent. SBP will provide refinance to Participating Financial Institutions (PFIs) at service charges of 1 percent per annum for financing to SME clients, allowing PFIs to charge maximum spread of 4 percent per annum. For financing to corporate and commercial borrowers, SBP will provide refinance to PFIs at service charges of 2 percent per annum, allowing PFIs to charge maximum spread of 3 percent per annum.
The borrowers that are on active taxpayers’ list under the Income Tax Ordinance, 2001 would be eligible for 1 percent per annum and will get financing at 4 percent. The subsidy on their mark-up rate will be deducted from SBP’s rate of refinance/ service charges.
This scheme is more focused on small businesses because companies with a 3 month wage and salary expense of up to Rs. 200 million will be able to avail the full amount (100 percent) of their expense in financing while those with a 3 month wage. Businesses with salary expanses more than Rs. 200 million and less than or equal to Rs. 500 million can get Rs. 200 million or 75 percent of 3 months wage bill, whichever is higher.
In addition, salary expense of greater than Rs. 500 million will be able to avail up to 50 or Rs. 375 million of actual 3 months wage bill, whichever is higher.