State Bank enhances scope and financing limits under its Rozgar Scheme

Karachi, May 11, 2020 (PPI-OT): Since its launch of Refinance Scheme to Support Employment and Prevent Layoff of Workers, called Rozgar Scheme in common parlance, State Bank has been constantly receiving feedback from various stakeholders, making the scheme more facilitative for businesses and creating incentives to prevent layoff of employees under current COVID Pandemic scenario. Many of the changes in the scheme were carried out to ensure that the benefits of the scheme particularly reaches to the SMEs that offer employment to a large number of people.

In this regard, recently announced Government’s risk sharing facility and allowing corporate guarantees as collateral are expected to incentivize banks in extending loans to collateral deficient SMEs. Now taking another step further to facilitate middle and large businesses, which employ large numbers of people, to ensure payment of wages and salaries under this scheme, SBP has decided to enhance its refinance limits announced earlier. Hence, State Bank will now finance up to 100% of wages and salaries of businesses with average 3- month wage bill of up to Rs500 million (see table below).

This can be used for the onward payment of wages and salaries for the months of April, May and June, 2020. Earlier, 100% financing was available up to a wage bill of Rs200 million only. Similarly, for businesses with 3-month wage bill exceeding Rs500 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 Rs500 million. The above changes are applicable with immediate effect. However, businesses that had earlier availed lower financing due to applicable limits can now avail additional financing on the basis of revised criteria. Further details on this measure are available in the SBP circular available at: http://www.sbp.org.pk/smefd/circulars/2020/CL10.htm

This increase in financing limits along with Government’s risk sharing facility for collateral deficient SMEs and small corporates will enable the full array of businesses to benefit from SBP’s Rozgar Scheme and hence prevent large scale lay offs. Further, State Bank has also extended the availability of its refinance scheme to non-deposit taking financial institutions as well. They can now avail financing under the scheme for payment of wages and salaries of their employees.

Since the launch of the scheme till May 08, 2020, banks have received requests of more than 1,440 businesses for the financing of over Rs. 103 billion for providing wages and salaries to around one million employees whose jobs have been supported because of this scheme. Of this amount, banks have already approved financing of Rs 47 billion for 500 companies covering over 450,000 employees. A complete list of the measures taken by the SBP to support the economy and public health since the outbreak of COVID-19 is available at: http://www.sbp.org.pk/corona.asp.

If end-users would like further information on these SBP measures in the context of COVID-19 or if they are experiencing issues with commercial banks in benefiting from these measures, they can contact a dedicated COVID-19 SBP team by email at covid19.stimulus@sbp.org.pk or by phone at 111-727-273. End-users are encouraged to review the material available at the above webpage including relevant circulars and any available FAQs before contacting the SBP for further information.

For more information, contact:
Chief Spokesman,
State Bank of Pakistan (SBP)
Central Directorate
I.I. Chundrigar Road, Karachi, Pakistan
Tel: +92-21-111-727-111
Tel: +92-21-39212562
Fax: +92-21-39212433 – 39212436
Email: chief.spokesperson@sbp.org.pk
Website: www.sbp.org.pk

Workers’ Remittances Received

Karachi, May 11, 2020 (PPI-OT): 1. The Workers’ Remittances received during July – April FY20 amounted to US $ 18,781.6 million recording an increase US $ 980.6 million or 5.5 percent over remittances received during July – April FY19 (US $ 17,801.0 million).

2. Workers’ remittances during April 2020 amounted to US $ 1,790.0 million recording a decrease of US $ 104.4 million or 5.5 percent over remittance received during previous month (March 2020, US $ 1,894.4 million).

3. The remittances during April 2020 (US $ 1,790.0 million) increased by US $ 19.8 million or 1.1 percent over remittance received during corresponding month of FY 19 (US $ 1,770.2 million).

4. During April 2020, larger amounts of Workers’ Remittances are received from Saudi Arabia (US $ 451.4 million), USA (US $ 401.9 million), UAE (US $ 353.8 million) and UK (US $ 226.6 million) recording an increase of 14.0 percent for USA whereas a decrease of 0.2 percent, 15.8 percent and 8.8 percent for Saudi Arabia, UAE and UK respectively as compared to March 2020.

For more information, contact:
Chief Spokesman,
State Bank of Pakistan (SBP)
Central Directorate
I.I. Chundrigar Road, Karachi, Pakistan
Tel: +92-21-111-727-111
Tel: +92-21-39212562
Fax: +92-21-39212433 – 39212436
Email: chief.spokesperson@sbp.org.pk
Website: www.sbp.org.pk

State Bank of Pakistan allows financing for BMR and expansion under its Temporary Economic Relief Facility

Karachi, May 08, 2020 (PPI-OT): The State Bank of Pakistan (SBP) has opened up it subsidized Temporary Economic Relief Facility (TERF) for Balancing, Modernization and Replacement (BMR) and expansion of existing projects. This measure has been taken to provide further stimulus to the economy in the context of COVID‐19’s impact on the economy, to support investment in the country for modernizing or expanding manufacturing / production units, and in response from feedback from stakeholders.

Since the outbreak of COVID‐19, SBP has taken several measures to safeguard economic activity in the country. On March 17, 2020 SBP introduced TERF and its Shariah compliant version to stimulate new investment in manufacturing sector. Under this scheme, SBP provides refinance to banks for their onward extension of financing at maximum end‐user rate of 7 percent for 10 years. The maximum financing for a single project under the Scheme is Rs. 5 billion. The objective of this facility is to boost economic activity through investments in manufacturing units.

While allowing BMR and expansion of existing projects, SBP has allowed financing for purchase of new imported and locally manufactured plant and machinery against foreign LC and inland LC. The funding under the facility cannot be used for procurement of second‐hand machinery, land or carrying out civil works. Further, SBP has also introduced additional internal and external checks and controls to ensure proper utilization of funds. Further details on this measure are available in the SBP circular available at: http://www.sbp.org.pk/smefd/circulars/2020/CL9.htm

With expansion in scope of the facility, SBP expects that existing businesses will avail this subsidized funding to improve productivity of their business projects leading to higher economic activity and employment generation.

A complete list of the measures taken by the SBP to support the economy and public health since the outbreak of COVID‐19 is available at: http://www.sbp.org.pk/corona.asp. If end‐users would like further information on these SBP measures in the context of COVID‐19 or if they are experiencing issues with commercial banks in benefiting from these measures, they can contact a dedicated COVID‐19 SBP team by email at covid19.stimulus@sbp.org.pk or by phone at 111‐727‐273. End‐users are encouraged to review the material available at the above webpage including relevant circulars and any available FAQs before contacting the SBP for further information.

For more information, contact:
Chief Spokesman,
State Bank of Pakistan (SBP)
Central Directorate
I.I. Chundrigar Road, Karachi, Pakistan
Tel: +92-21-111-727-111
Tel: +92-21-39212562
Fax: +92-21-39212433 – 39212436
Email: chief.spokesperson@sbp.org.pk
Website: www.sbp.org.pk

Ministry of Finance and State Bank of Pakistan introduce risk-sharing mechanism to support bank lending to SMEs and small businesses to avail SBP’s Refinance Facility to Support Employment

Karachi, May 06, 2020 (PPI-OT): Taking cognizance of the SMEs finding difficulties in arranging adequate collateral and banks’ risk averseness in taking exposures for such lending under the SBPs Refinance Scheme to Support Employment and Prevent Layoff of Workers, Ministry of Finance has stepped forward to shoulder risk sharing with banks.

Accordingly, the Federal Government has allocated Rs30 billion under a credit risk sharing facility for the banks spread over four years to share the burden of losses due to any bad loans in future. Under this risk sharing arrangement, Federal Government will bear 40% first loss on principal portion of disbursed loan portfolio of the banks. This facility will incentivize banks to extend loans to collateral deficient SMEs and small corporates with sales turnover of upto Rs2 billion to avail financing under SBP refinance scheme.

Under the SBP’s Refinance Scheme to Support Employment and Prevent Layoff of Workers due to the impact of COVID-19, businesses that commit to not lay off workers in the next three months can avail credit through banks for the three months of wages and salaries expenses at a concessional markup rate.

The risk-sharing mechanism being introduced today, that is expected to increase the banks’ incentive to lend to SMEs and small corporate under this scheme, was developed on the basis of feedback received from relevant stakeholders and in collaboration between MOF and SBP. Ministry of Finance’s swift approval of the subsidy to provide risk coverage to banks has made it possible for the SBP to launch this credit risk sharing facility for which relevant circular has been issued today. SBP will continue to monitor the implementation of the scheme.

For more information, contact:
Chief Spokesman,
State Bank of Pakistan (SBP)
Central Directorate
I.I. Chundrigar Road, Karachi, Pakistan
Tel: +92-21-111-727-111
Tel: +92-21-39212562
Fax: +92-21-39212433 – 39212436
Email: chief.spokesperson@sbp.org.pk
Website: www.sbp.org.pk

State Bank reinforces its support to health sector in fight against COVID-19

Karachi, May 01, 2020 (PPI-OT): In the background of rising cases of COVID‐19 in the country and with the need to strengthen health sector in fight against COVID‐19, SBP today enhanced financing limit of a single hospital/ medical center under its Refinance Facility for Combating COVID ‐19 (RFCC) from Rs. 200 million to Rs. 500 million. RFCC is an emergency funding facility to support hospitals/medical centers to develop their capacities for treatment of infected patients of COVID‐19. The financing under this facility is being made available by State Bank at 0% to banks that can charge a maximum rate of 3% per annum to hospitals / medical centers.

State Bank has been continuously improving features of this Facility to ensure timely financial support to hospitals/medical centers engaged in combating COVID‐19. So far, financing of Rs. 2.2 billion for 11 hospitals/medical centers has been approved whereas financing requests of Rs 3.6 billion for 23 hospitals/medical centers are being processed by the banks. With today’s enhancement of financing limit, it is expected that large scale facilities will be created for treating COVID‐19 patients by using subsidized funding being extended under this Facility.

For more information, contact:
Chief Spokesman,
State Bank of Pakistan (SBP)
Central Directorate
I.I. Chundrigar Road, Karachi, Pakistan
Tel: +92-21-111-727-111
Tel: +92-21-39212562
Fax: +92-21-39212433 – 39212436
Email: chief.spokesperson@sbp.org.pk
Website: www.sbp.org.pk

State Bank of Pakistan reserves increases by US$1,181m

Karachi, April 30, 2020 (PPI-OT): State Bank of Pakistan said on Thursday that the total liquid foreign reserves of Pakistan stood at US$18,463.0 million on 24 April 2020. The bank reported that the break-up of the foreign reserves position was as under:

Foreign reserves held by the State Bank of Pakistan were US$12,070.3 million; Net foreign reserves held by commercial banks were US$6,392.7 million; and total liquid foreign reserves were US$18,463.0 million.

During the week ending 24 April, SBP received US$1.39 billion from IMF under the Rapid Financing Instrument (RFI) to address the economic impact of the Covid-19 shock. SBP has also made government external debt repayments amounting to US$234 million. Overall, during the week, SBP reserves increased by US$1,181 million to US$12,070.3 million.

For more information, contact:
Chief Spokesman,
State Bank of Pakistan (SBP)
Central Directorate
I.I. Chundrigar Road, Karachi, Pakistan
Tel: +92-21-111-727-111
Tel: +92-21-39212562
Fax: +92-21-39212433 – 39212436
Email: chief.spokesperson@sbp.org.pk
Website: www.sbp.org.pk

Suspension of Dividends by banks/DFIs for two Quarters

Karachi, April 22, 2020 (PPI-OT): Amid the growing concerns of COVID – 19 pandemic, State Bank of Pakistan (SBP) has, thus far, announced a number of regulatory relief measures for the financial sector and real economy. These measures are primarily aimed at ensuring the safety and soundness of banking sector while enhancing their lending capacity to support the economic activities in the country. The banks/DFIs in Pakistan have much higher capital levels than prescribed globally or minimum levels advised by the State Bank of Pakistan. Accordingly, SBP sees no immediate signs of systemic capital fragility across the banking industry. However, banks/DFIs have been advised to suspend the dividend distribution for the next two quarters.

 

The banks/DFIs that have approved dividend declaration for quarter ended March 2020 by 22nd April 2020 have been advised to suspend dividend distribution for June and September quarters 2020. All other banks have been advised to suspend dividend distribution for March and June 2020 quarters. This important decision has been taken keeping in view uncertainty arising out of COVID 19 pandemic and probability of higher infections in loan portfolios of banks as a result of that. This measure will also enhance loss absorption capacity of the banking system and will enable them to further support the real sector in Pakistan.

 

Notably, while releasing prescribed capital buffers and taking other regulatory relief measures, a number of other jurisdictions across the globe have also placed moratorium on dividend distribution and payment of cash bonuses to senior/executive officers and material risk takers. We are confident that the suspension of dividend payout will further increase the resilience of banking sector and improve their ability to provide much needed credit support to the real economy. SBP will keep on closely monitoring the performance of banks/DFIs under its regulatory domain and take appropriate action as needed to ensure safety and soundness of individual banks/DFIs and the overall banking system.

 

For more information, contact:

Chief Spokesman,

State Bank of Pakistan (SBP)

Central Directorate

I.I. Chundrigar Road, Karachi, Pakistan

Tel: +92-21-111-727-111

Tel: +92-21-39212562

Fax: +92-21-39212433 – 39212436

Email: chief.spokesperson@sbp.org.pk

Website: www.sbp.org.pk