SBP rolls out interest-free loans for e-bikes, e-rickshaws

KARACHI: The government has introduced a cost-sharing scheme for electric bikes and e-rickshaws/loaders to promote energy efficiency and facilitate the transition to green technologies in the automotive sector, the central bank said in a circular on Monday.

This scheme aims to finance approximately 116,000 e-bikes and 3,170 e-rickshaws/loaders during the current fiscal year, the State Bank of Pakistan said.A minimum of 25 per cent of the total number of e-bikes will be allocated for women, while a maximum of 10 per cent of the total e-bikes will be designated for individuals intending to use them for business purposes, such as courier or delivery services. Additionally, up to 30 per cent of e-rickshaws/loaders will be available for fleet operators.

According to the circular, the implementation of the scheme will occur in two phases. In the first phase, 40,000 e-bikes and 1,000 e-rickshaws/loaders will be distributed, while the remaining 76,000 e-bikes and 2,171 e-rickshaws/loaders will be distributed in the second phase.

To make financing more affordable, the government is offering capital subsidies of up to Rs50,000 per e-bike and Rs200,000 per e-rickshaw/loader. Loans will be provided under an 80:20 debt-to-equity ratio, where the equity portion will include both the capital subsidy and the borrower’s contribution.

A fixed capital subsidy will first be applied, and any remaining amount will then be paid by the borrower. “To clarify, if the equity portion of 20 per cent is fully covered by the capital subsidy, the borrower will not need to make any payment,” stated the SBP.

The loans will be interest-free for end users, with the government covering the full markup cost. The repayment term will be a maximum of two years for e-bikes and three years for rickshaws and loaders. Borrowers will only be responsible for paying the principal amount and insurance in their monthly installments.

According to the SBP, the scheme will be facilitated through a digital lending platform, minimising human interaction. “Banks will integrate with a digital platform for sharing information, among other functions,” it said.

Vehicle models and vendors will be selected by the Engineering Development Board (EDB), and manufacturers will be responsible for the timely delivery of vehicles to borrowers, as well as for providing regular after-sales service.