The Presidents/CEOs,
All Banks/DFIs

 

Dear Sirs/Madam,


Risk Sharing Facility for SBP Refinance Scheme to support employment and prevent layoff of workers


    Please refer to IH&SMEFD Circular No. 06 and 07 of 2020 dated April 10, 2020 regarding SBP Refinance Scheme to support employment and prevent layoff of workers.

2. With a view to incentivize banks/DFIs for financing to SMEs and small corporates under above mentioned schemes, Government of Pakistan has approved budgetary allocation for ‘Risk Sharing Facility for State Bank of Pakistan (SBP) Refinance Scheme to Support Employment and Prevent Layoff of Workers’. Accordingly, the risk sharing facility is being provided with immediate effect, with following key features.

S.No

Particulars

Key features

1

Eligibility


The financing extended to businesses with maximum sales turnover of Rs 2 billion, under SBP refinance scheme to support employment and prevent layoff of workers is eligible for Risk Sharing Facility by the GOP.

2

Risk Coverage


GoP will bear 40% first loss on disbursed portfolio (principal portion only) for eligible borrowers.

Note: In case of non-repayments, after being classified as ‘Loss’ (as per the classification criteria laid down under respective SBP Prudential Regulations, credit loss subsidy claim will be paid by the GOP).

3

Security Requirements


Security arrangements will be as per executing agency’s own credit policy after taking into account the factor of this risk sharing facility. Hence, banks are encouraged to facilitate collateral deficient borrowers. In any case, banks will not be asking for additional collaterals over and above 60% of the principal amount and markup thereon.
 

4

Executing Agency


Banks and DFI assigned limits under SBP scheme will be eligible Executing Agencies (EAs).
 

5

Additional Measures


EAs shall develop and implement robust mechanism to ensure that the loans are utilized for intended purpose only.
 

6

Administration


Development Finance Support Department (DFSD), SBP BSC will manage operational aspects of the risk sharing facility. DFSD will submit data under the risk sharing facility on quarterly basis to the Finance Division.
 

7

Subsidy Payment


EAs shall submit credit loss subsidy claims to DFSD on quarterly basis within 15 working days after the end of each quarter. DFSD after scrutiny of the claims shall submit the same to Finance Division, GOP. FD will release payment against submitted claims within 15 working days. Upon receipt of subsidy from GOP, SBP BSC Karachi will credit the account of EAs with the subsidy amount.
 

3.  The banks/DFIs are advised to ensure immediate implementation of ‘Risk Sharing Facility for SBP Refinance Scheme to support employment and prevent layoff of workers’ and facilitate the eligible businesses to avail financing under this facility.
 

Yours sincerely,

Sd/-

(Dr. Mian Farooq Haq)
Director

 

You can access the same circular via State Bank’s website by clicking on the following link:

 

http://www.sbp.org.pk/smefd/circulars/2020/C9.htm