SBP announces incentives to assist businesses avoid layoffs

KARACHI: In a bid to assist businesses from sacking employees amid COVID-19, the State Bank of Pakistan (SBP) had announced another incentive package.

“The additional incentive package includes relaxation 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 small and medium enterprises and bank’s exposure limits,” said the SBP.

The banks have been directed by the central bank to provide refinancing at zero per cent, and the package was effective immediately.  

Prior to this, the central bank offered an incentive package – Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns, under which the businesses were allotted concessional credit for payroll finance on the condition to not sack employees for the next three months.

“Banks have also been encouraged to provide loans without any collateral i.e. taking clean exposure of up to Rs5 million,” the statement further read, in an attempt to enable financing against corporate guarantees of companies in value and supply chain.

To cater the active taxpaying businesses, the bank announced to reduce the markup rate, fixing it at 3% from 4% earlier. In addition, increasing the rate gap between active tax-paying and the non-tax paying businesses, the latter can be charged an end-user mark-up rate of up to 5%.

As a relief to the employees receiving wages under the scheme, the banks have been permitted to open accounts, after the employer submits the required information, documents and an undertaking declaring the personnel as employees.

The banks will verify the employee status employees using the National Database and Registration Authority Verisys before activation of such accounts. These accounts, however, could be used solely for salary disbursement and withdrawal purposes only.

“Businesses have also been given the 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,” the SBP further added.

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