With an aim to facilitate the business concerns further in availing the subject refinance facilities, the SBP has announced some more incentives for borrowers under this scheme to support employment and avoid layoffs in the country.
These additional incentives include relaxations in collateral requirements, 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 effective immediately.
The SBP has enhanced the incentive for active tax payers and the mark up rate for them has been reduced to 3 percent. SBP refinance rate/service charges have been reduced to 0 percent for all types of eligible borrowers that are on Active Tax Payers List, which now will get financing at 3 percent markup rate compared to 4 percent set earlier.
The maximum spread allowed to the Participating Financial Institutions (PFIs) on their financing to active taxpayer borrowers will, therefore, be 3 percent p.a., with maximum end user rate of 3 percent p.a. However, the end user rate, for rest of the borrowers, will continue to be 5 percent with the same composition as announced previously.
Based on feedback from stakeholders, SMEs including vendors and distributors were particularly facing the problem of providing security/collateral. To address this issue, SBP has now allowed banks for providing financing against corporate guarantees of companies in value/supply chain relationship with the borrowers. Moreover, banks have also been encouraged to provide loans without any collateral, ie, taking clean exposure of up to Rs 5 million.
"Banks/DFIs are being allowed to extend financing to such vendors/distributors against corporate guarantee(s) issued on their behalf to facilitate vendors/distributors who are suppliers/distributors of large corporates," the SBP circular said.
In this regard, a vendor/distributor may also provide corporate guarantees of multiple corporates with whom the vendor/distributor has business relationships. However, the SBP has made it clear that this consideration of corporate guarantee as security will only be available for financing under the subject Schemes, it added.
In addition, to facilitate employees for receiving wages under the scheme directly, banks have been allowed to open their accounts on the information and documents provided by the employers along with an undertaking stating that these persons are bona fide employees/workers. Banks will ensure verification of the employees using Nadra Verisys before activation of such accounts. These accounts, however, could be used solely for salary disbursement and withdrawal purposes only. The SBP said that these accounts will solely be used for crediting salaries/wages and debits there against. These accounts can be used as normal accounts once PFIs comply with relevant SBP's AML/CFT Instructions.
Businesses have also been given flexibility to avail loan under SBPs refinance scheme for wages from any bank and they will not be limited to avail loans from the bank that manages their payroll.
Further, in cases where the customers have applied for the financing under the scheme and before the loan applications are approved, the customers disburse salaries pertaining to the month of April 2020 through their own sources, the PFIs are allowed to reimburse such salaries/wages to the customers after the approval of their loan applications.
This relaxation is, however, only available for the salaries/wages pertaining to the month of April 2020, the SBP maintained.
A simplified loan application form has been prescribed by SBP to facilitate SME borrowers, which can apply for the loans under the schemes and also enable the banks to process their requests within the prescribed timeline of 15 days.
As per fresh directives, the exposure under the scheme will not be counted towards Single Obligor Exposure Limit or Group Exposure Limit prescribed under Prudential Regulations (PRs) for Corporate and Commercial Banking and PRs for Small & Medium Enterprise Financing.
All these benefits will also be available to businesses availing financing under the scheme from Islamic Banking Institutions.