Some 700 companies have applied for Rs 65 billion financing under the Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns.
The special refinance scheme was introduced in the second week of April to support the employment of workers in the face of economic challenges posed by the spread of Covid-19, and to incentivize businesses to not lay off their workers during Covid-19 pandemic.
Banks have received a very encouraging response as a number of firms are approaching their respective banks to avail this scheme that provides concessional loans at 3 percent to any company that commits to not lay off workers for the next three months.
According to fresh numbers in the first two weeks of this refinance scheme, some 700 companies have applied for the financing under this scheme. Overall applications from different companies worth Rs 65 billion are in process at banks and DFIs that will protect jobs of more than half a million employees.
Industry sources said that the number of application is likely to further increase in coming months as banks are still receiving queries relate to Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns.
They said that as per estimates overall disbursement under this scheme will be more the Rs 100 billion as a number of firms are facing financial issues due to slowdown in economy followed by COVID-19.
The State Bank of Pakistan (SBP), on April 10, introduced an incentive scheme titled "Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns" to enable the provision of concessional credit for payroll finance to businesses that commit to not lay off workers for the next three months.
In order to further facilitate the business concerns, some more incentives were announced under the scheme on April 23, 2020. These additional incentives include relaxations in collateral requirements, a further reduction in end-user rate, reimbursement of wages, special accounts for employees to receive wages, borrowing from banks other than maintaining payrolls, simplification of application form for SMEs and bank's exposure limits.
These additional incentives will be effective immediately. Under this scheme active taxpayers can get refinancing for payment of salaries at the rate of 3 percent.
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