Refinancing Scheme for Wages & Salaries

Introduction

With a view to support businesses to continue payment of wages and salaries to their workers and employees in COVID-19 outbreak, State Bank of Pakistan (SBP) has introduced a temporary Refinance Scheme for Payment of Wages and Salaries to the Workers and Employeesof Business Concerns.This Scheme is expected to ease cash flow constraints of the employers for timely payment of the wages and salaries to their workers and employees and there by avoid layoffs.

Scope and Eligibility

Refinancing will be available to finance wages and salaries of permanent, contractual, daily wagers as well as outsourced employees of existing as well as new borrowers of banks and DFIs.

Rate of Service Charges for End Users

The end user markup rate under the Scheme shall be 3% for filers and 5%for non-filers.

Maximum Financing Limit

The Refinance scheme will cover wages and salaries of workers/employees of borrower for three months from April 2020 to June 2020.

Maximum financing limit of a borrower under this scheme will be determined in the following manner:

Category	Wage Bill for 3 months	Loan Limit	Maximum Loan Limit
(1)	(2)	(3)	(4)
A	Less than or equal to Rs. 200 million	100% of actual 3 months wage bill	Rs.200 million
B	More than Rs. 200 million and less than or equal to Rs. 500 million	Rs.200 million or 75% of 3 months wage bill, whichever is higher	Rs.375 million
C	More than Rs. 500 million	Rs.375 million or 50% of actual 3 months wage bill, whichever is higher	Rs.500 million

Period of Financing and its Repayment

There payment of loan (principal amount) by the borrower will start from January 2021 after disbursement period of three months followed by maximum grace period of 06 months.
There payment of loan (principal amount) will be made in 8 equal quarterly installments.

Risk Coverage

GOP will bear 40% first loss on disbursed portfolio (principal portion only) for eligible borrowers having maximum sales turnover of Rs. 2Billion.