According to banking industry sources, the majority of the applicants for rescheduling of loans is already defaulting on the payment of their monthly installments over the last six months. "They want to get the benefit of the scheme but the SBP has left it to the sole discretion of banks as which customer is to be accommodated and which one not," said a banker from the Bank of Punjab, requesting anonymity. He further added: "The banks are not entertaining most of such defaulters. Banks are cancelling most of such applications soon they receive it online."

Another banker said those who are pertinent in payment of their monthly installments are not taking interest in this scheme, as they believe they would not be eligible for future loans unless and until the tenure of the deferred amount gets completed. He said one of his customers is a transporter. The bank has already approved the loan for two vehicles for him. He is not interested to apply under the scheme, as the bank has informed that new loan would not be sanctioned unless he would enjoy deferment of payment on his existing loan, said the banker.

Sources from some other banks have also confirmed that applications for fresh loans would be withheld in case a customer got rescheduled the existing loan, as no bank can afford to defer either the principal or markup amount and issue a fresh loan.

It is also worth noting that some banks are offering deferment of payment both on the principal as well as the mark-up amount.

But still, a good number of banks are offering this facility only against the principal amount, and not the markup and insurance amounts.

The mark-up amount is always on the higher end against the principal amount.

According to the banking industry sources, the majority of customers are expecting a revival of economic activities by the middle of May, therefore, they had postponed their decisions of applying for deferment of loans up to 15th of May, they said.

Meanwhile, the Small and Medium Enterprises (SMEs) departments of banks are entertaining applications for payment of wages at 3 percent.

Majority of the SMEs, which are unable to pay wages to their employees due to the recovery issues are applying for this scheme. The sales departments are more adamant on this side of the offer and they are encouraging their customers to avail it forthwith.

According to the banking industry sources, the mark-up is negligible, therefore, the small and medium enterprises with 50 to 100 employees are availing this facility to pay the wages of their employees.

The State Bank of Pakistan (SBP) has directed the banks to offer their customers rescheduling of loans as well as refinancing at 3 percent to support employment and prevent the layoff of workers till 30th June 2020.

Copyright Business Recorder, 2020