NBP cuts markup rate by 1pc for youth loans

ISLAMABAD: The National Bank of Pakistan (NBP) has decided to slash down mark up rate for borrowers of Prime Minister Youth Loan Scheme (PMYLS) in the wake of decreasing discount rates by the central bank.
“Yes, we have decided to decrease mark up rate for borrowers of PM Youth Loan Scheme as it is our target to disburse Rs15 billion in loan till end of the ongoing calendar year,” said the President NBP Syed Ahmed Iqbal Ashraf while talking to a select group of reporters here on Tuesday.
The SBP had recently cut down its discount rate by 100 basis points, bringing it down from 8 percent to 7 percent, on the basis of which the central bank provided funds to commercial banks.
Under the PMYLS, he said, the borrowers was bearing a cost of 8 percent while the SBP was providing subsidy on mark up by 5 percent so it was decided that the cost of 8 percent would be brought down keeping in view spread of the nationalised bank. He said that the NBP had so disbursed Rs4.8 billion under this loan scheme. When asked about reasons for slow pace of loan scheme, he said that they wanted to ensure complete transparency in it. “We have received total 60,000 applications out of which 16,000 applications were found fit and proper in accordance with our criteria,” he said and added that they had so far provided first installment to 10,600 applicants for providing loan up to Rs2 million. On average, the NBP had approved a loan worth Rs1 to Rs1.1 million, he added.
“We are waiting for making disbursement to 4,800 applicants which will be selected through balloting in order to implement NFC formula for catering requirements of all four provinces,” he said and added that they had developed a software for making this scheme a complete success and were ready to share with other banks.
“We have envisaged target to disburse Rs15 billion till December this year,” he said and shared that the borrowers were not coming for getting second installments and they were informing them through letters to come and get their second installments.
Total lending of the NBP, he said, stood at Rs780 billion so far out of which Rs500 billion were provided to public sector enterprises after getting government guarantees. The remaining Rs200 billion has been provided to private sector, he added.
He said that the Non Performing Loan (NPLs) of the NBP stood at 16.3 percent and made it clear that they had not written off of the loan amount. The other banks were clearing their balance sheet but the NBP had not written off loans, he observed.
In case of NBP fiasco in Bangladesh branch, he said that 61 people were given charge sheet and they handed over this case officially to NAB to hold culprits responsible for this case. The agriculture credit, he said, provided by NBP stood at Rs75 billion out of total targeted amount of Rs500 billion for all banks.
Answering a query, he said that the NBP had provided a loan on the basis of government guarantees to PSEs as they provided loan to Steel Mills worth Rs30 to 35 billion and PIA Rs70 to Rs80 billion. He said that the NBP and HBL were providing financing of $1 billion for power project in Punjab to generate electricity through LNG project. He said that there were total 7 million account holders out of which 50 percent were dormant. The NBP has been making efforts to promote financial inclusion. He said that they were taking steps to facilitate pension payment and project for their ATMs would be completed soon by giving them choice to avail this facility.