To minimize the economic disruptions caused by COVID-19 and to help businesses in payment of wages and salaries to their workers and employees; the State Bank of Pakistan (SBP) has introduced an Islamic Refinance Scheme that will support continued employment during these challenging times. This scheme is expected to ease cash flow constraints of the employers and thereby avoid layoffs. Salient features of the scheme are as follows:
The Scheme shall finance payment of wages and salaries of permanent, contractual, daily wagers as well as outsourced employees of existing as well as new customers of the Bank for the months ranging from April to June, 2020.
Businesses that are impacted by Coronavirus situation and are labour intensive (i.e. dependent on human beings to run) shall be given a preference in financing.
Each customer can avail this facility from one bank only.
Customers that have relationship with multiple banks may apply to a bank that manages their payroll.
Government Entities, Public Sector Enterprises, Autonomous Bodies and Financial Institutions are not eligible under this Scheme.
Subject to fulfillment of Shariah requirement by the Client and internal approvals of the Bank.
|Category||Wages & Salaries Bill for 3 months||Financing Limit||Maximum Financing Limit|
|A||Less than or equal to Rs. 500 million||100% of actual 3 months wage bill||Rs. 500 million|
|B||More than Rs. 500 million||Rs. 500 million or 75% of actual 3 months wage bill, whichever is higher||Rs. 1,000 million|
The settlement of financing under the Scheme shall start from January, 2021 i.e. after 6 to 8 months of grace period, depending upon the month in which financing has been availed. The settlement is to be made in eight equal quarterly instalments. Total Tenor of the facility is around 32 months (2 years & 8 months).
End user financing rate is 3% for filers & 5% for non-filers
This Scheme is valid till June 30, 2020. However, the Bank can disburse payroll for the month of June, 2020 in July, 2020.
Security / Collateral will be as per Bank's own credit policy
(after taking into account the factor of risk coverage facility offered by SBP)
Customers having sales turnover up to Rs. 2 billion will be eligible for 40% risk coverage through Risk Sharing Facility offered by State Bank of Pakistan
Customers availing this Scheme shall undertake that there shall be no layoffs of their workers or employees during the months from April till June, 2020.
The Scheme does not cover other employee benefits such as bonuses, employee benefit plans, staff retirement benefits, gratuity etc.
This financing will not be used to make payments/adjust the existing financing facilities of the customer.
The wage bill for three months i.e. April, May & June will be calculated as per the latest available financial statements, preferably audited, at the time of sanctioning of limit.
Customer availing this facility shall undertake that in case of failure to pay instalments as per agreed settlement schedule, a certain charity amount as per the agreed terms shall be liable.
Financing under the Scheme shall be subject to compliance with all rules and regulations including Prudential Regulations prescribed by the SBP for each type of customer.