Kamyab Jawan Program: Central Bank Explains Loan Procedure

The State Bank of Pakistan (SBP) has drawn up a government payment process for Kamyab Jawan Youth Entrepreneurship Scheme (PMKJ-YES) for service charges and credit loss subsidies for prime ministers.

Loan Size

The SBP informed that under the Scheme, loans are segregated into two tiers i.e.

Tier 1 (T1) loans from Rs. 100,000 to Rs.0.5 million.

Tier 2 (T2) loans – above Rs 0.5 million and upto Rs 5 million. 

The loans will be provided through the banking system at service charges of 6pc p.a. for TI loans and 8pc p.a. for T2 loans, while the rate of return for banks working as Executing Agencies (EAs) for PMKJ-YES would be KIBOR (6- Months offer) + 500 bps for T1 loans and KIBOR (6- Months offer) + 400 bps for T2 loans with KIBOR to be reset bi-annually.

he Pakistani Government (GOP) shall bear a gap in service charges subsidies, advised SBP between the rate of return for EAs and the rate of user end.

Furthermore, in the case of T1 loan and up to 10pc for T2 loans, GOP will bear credit losses (main portion only) on the distributed portfolio of banks up to 50pc.

“As per SBP’s Prudential Regulations for Small Enterprise Financing, loans are classified as loss on objective basis (time based criteria) when default period is 18 months or more or on subjective basis. Hence, for determination of admissible credit losses against EA’s total PMKJ-YES disbursed portfolio at the end of each quarter, only loan cases classified under loss category as per SBP SME Financing PRs will be considered,” said the central bank in a statement.

Procedure for loans Payment

Executing agencies shall review the credit applications for unemployed youth in the manner set forth in its 2017 IH&SMEFD Circular No. 08 of 11 July 2019, as per the criteria of PMKJ-YES approved for by the Federal Cabinet, circulated to all banks by the National Bank of Pakistan.

After the completion of the paperwork formalities, the borrower’s lending facility is approved and paid out by the EA. These loans are entitled to subsidize service charges and to subsidize credit losses.

The State Bank of Pakistan would not conduct any additional evaluation on the eligibility of borrowers.

Under the ‘Kamyab Jawan Programme’, one hundred billion rupees will be distributed among youth as loans for their business ventures, and the scheme will benefit one million youth.

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