The State Bank of Pakistan has introduced a temporary refinance scheme for businesses. The aim of this initiative is to save jobs and discourage businesses from laying off workers amidst the coronavirus pandemic. SBP wants to support the employment of workers facing economic challenges due to COVID-19.
A notification was issued by SBP, as per which the Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns scheme will be available to all the businesses in Pakistan via the commercial banks.
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The notification said, “It will cover all types of employees including permanent, contractual, daily wagers as well as outsourced workers.”
Finances for wages and salaries’ expense, for three months from April to June 2020 will be provided under the scheme to the businesses that did not lay off their employees in these three months.
As per the notification even though the mark-up on loans under the scheme is up to 5%, those who are active tax payers can get the loans at 4% reduced rate. The scheme will specially prioritize small businesses.
Those businesses that have three-month wage and salary expenses amounting to Rs200 million can get full amount of their expenses in financing.
However, the business whose three-month wage and salary expenses are over Rs500 million will be able to avail up to 50% of their expenses in financing.
The notification said, “Businesses whose expenses fall between these two brackets will be able to avail up to 75% of their three-month salary and wage expenses.”