State Bank launches credit guarantee scheme for women entrepreneurs

KARACHI: The State Bank of Pakistan (SBP) on Thursday launched refinance and credit guarantee scheme to support women entrepreneurs across the country, in efforts to revive economic activity and improve access to financing facilities to small businesswomen.

“In order to encourage SME (small and medium enterprises) financing to women entrepreneurs across the country, the scope of the scheme has been expanded to all the districts of the country with immediate effect,” the SBP said in a circular posted on its website.

Banks would provide small loans worth Rs15 million to women borrowers for a period of up to five years, including maximum grace period of up to six months. The SBP said that financing under the scheme should be provided for setting up of new business enterprises or for expansion of existing ones.

Under the scheme, refinancing would be provided by the central bank at zero percent to participating financial institutions (PFIs) for onward lending to women entrepreneurs at a mark-up rate of up to 5 percent per annum.

“Such loans will also be eligible for 60 percent risk coverage under SBP’s Credit Guarantee Scheme for Small and Rural Enterprises,” the circular said.

SBP would allocate limits to banks under the scheme on receipt of request from them. The limits would be reviewed on yearly basis. At least 20 percent of the limit should be allocated for lending to women entrepreneurs in Balochistan.

PFIs would claim refinance monthly on consolidated basis instead of claiming refinance on case to case basis.

The SBP said that repayment of loans by borrowers would be made in equal quarterly instalments after grace period (if any). The refinance granted by SBP to the PFIs would be recovered, on the due dates as reported in the original repayment schedule, from the accounts of the PFIs maintained with the respective office of the SBP.

“In case a borrower fails to repay the amount of instalment as per the original repayment schedule, the PFIs will be entitled to charge normal rate of mark up on such overdue principal amount besides taking other actions to recover the same as are incidental to such defaults,” it said.

All the financing under the scheme would be in adherence to relevant prudential regulations of SBP. Banks would not take more than 30 working days in evaluating an application for financing under the scheme from the date of receipt of complete information from the borrowers, it added.

Meanwhile, in a separate circular, the SBP said it has increased the maximum financing limit for a single project under long-term financing facility and Islamic long-term financing facility for plant and machinery to Rs2,500 million from Rs1,500 million.

The SBP took this step to promote investment in the export-oriented projects.