May 19, 2023 (MLN): The State Bank of Pakistan (SBP) on Thursday directed the banks/Microfinance Banks (MFBs), working as Executing Agencies (EAs) under the Prime Minister’s Youth Business & Agriculture Loan Scheme (PMYB&ALS) to submit their claims to Development Finance Support Department, SBP BSC, Karachi within 15 working days after the end of each quarter.
In December 2022, the government launched Prime Minister's Youth Business & Agriculture Loan Scheme (PMYB&ALS) to provide subsidized loans to micro, small and medium enterprises (SMEs) and the agriculture sector.
Under the scheme, the loans have been segregated into three tiers.
For Tier-1 loans, banks/DFIs, hereinafter referred to as Wholesale Lenders (WLs), will provide liquidity to MFBs/MFIs, collectively known as Microfinance Providers (MFPs) for onward lending to borrowers. Thus, MFPs will act as Executing Agencies (EAs) under Tier 1 loans, whereas for Tier 2 and Tier 3 loans, commercial and Islamic banks will act as EAs.
GOP shall absorb the difference between the bank rate and end-user rate as a mark-up subsidy. Six months KIBOR offer will be used for the calculation of mark-up subsidy with KIBOR to be reset bi-annually.
On behalf of the Government of Pakistan, payment of credit loss subsidy to EAs will be made on the disbursed portfolio under the scheme on a quarterly basis through DFSD, SBP BSC Head Office Karachi.
Wholesale Lenders (WLs) shall only be eligible to claim a 40% pari-passu government guarantee when their respective EAs will declare default or file bankruptcy/ insolvency and recovery is no more possible from respective EAs.
EAs under Tier 1 will be eligible to claim a 10% government guarantee on first loss basis on the disbursed portfolio when their loans are classified as “loss” as per the Prudential Regulations (PR) of SBP for Microfinance Banks i.e. regulations related to the classification of loans in "Loss" category would be the benchmark for this purpose and presently it is 180 days.
However, in the case of EAs regulated by SECP, NonBanking Finance Companies & Notified Entities Regulations, 2008 of SECP shall apply.
In case of Tier 1, EAs shall prepare and submit their credit loss claims to WLs within 05 working days after the end of the respective quarter. WLs shall also prepare their own credit loss claims in case of default of MFP and will arrange audit of both claims from an External Audit Firm.
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Posted on: 2023-05-19T10:09:38+05:00
