The State Bank of Pakistan (SBP) has launched a PKR 10 billion (USD 116 million) concessional financing scheme through agriculture banks and development finance institutions (DFIs) to improve access to financing in areas affected by the major flooding earlier this year.
“Under the scheme financing will be provided at affordable/concessional mark-up rates through banks/DFIs for which PKR 10 billion has been allocated” states the circular issued by the Small and Medium-Sized Finance Department of SBP [1]. The funds will be made available to lenders at an interest rate of 5 percent per annum. Banks are permitted to charge a maximum spread of 3 percent per annum, making credit available to SMEs and farmers at 8 percent per annum.
Another circular issued by the Microfinance Department of SBP advises microfinance banks (MFBs) to “reschedule/restructure loans to such borrowers, as per existing Prudential Regulations (PRs) for MFBs, where the possibility of recovery exists. For all such rescheduled/restructured loans and advances, MFBs may defer loan provisioning up to 31st December 2011.” [2]
By Witt Gatchell, Research Associate
About State Bank of Pakistan (SBP):
Established in 1956, the State Bank of Pakistan (SBP) is the nation’s central banking authority. SBP performs several primary functions: to regulate and supervise the nation’s financial system, to conduct monetary policy and to manage public debt. In addition, SBP performs non-traditional functions: to develop the financial framework of the country, to provide credit to priority sectors and to help in the Islamization of the banking system.
Sources and Additonal Resorces:
[1] SMEFD Circular No. 16 of 2010, “Refinance Scheme for Revival of SMEs & Agricultural Activities in Flood Affected Areas” http://www.sbp.org.pk/smefd/circulars/2010/C16.htm
[2] MFD Circular No. 04 of 2010, “Relief Measures for Borrowers of Floods Affected Areas” http://www.sbp.org.pk/mfd/2010/C4.htm
MicroCapital’s Microfinance Universe profile: State Bank of Pakistan (SBP)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Sta…
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