Karachi, July 11, 2019: In order to provide self-employment opportunities to unemployed youth, PTI government has launched “Prime Minister’s Kamyab Jawan” SME Lending Program across the country.
Under the scheme, government will provide mark-up and credit loss subsidy on small business loans in the range of Rs. 100,000 to Rs. 5,000,000 disbursed by banks under the program.
All men/women holding CNIC, aged between 21 and 45 years with entrepreneurial potential are eligible. For IT/ E-Commerce related businesses, the lower age limit will be 18 years.
Small enterprises (startups and existing businesses) as per definition of SBP and owned by youth as per above mentioned age brackets are also eligible. For IT/E-Commerce related businesses, at least matriculation and/or experience of at least six months.
Loans under the scheme will be provided 6-8 percent p.a to borrowers, while the federal government will pay KIBOR+400 pbs to KIBOR+500 bps p.a.
Size of the loan is segregated into two tiers i.e. Tier 1 (T1) loans- Rs 100,000 to Rs. 0.5 million and Tier 2 (T2) loans- Above Rs 0.5 million and up to Rs 5 million for Working capital loans and term loans for up to 8 years with maximum grace period of up to one year.
The borrower’s contribution of equity would be in the form of cash or immovable property and will be required after approval of the loan and 25 percent of the loans will go to women borrowers.
Security arrangements for T1 loans will be Clean, however, only personal guarantee of the borrower, while for T2 loans, it will be as per bank’s own credit policy.
Government will bear credit losses (principal portion only) on the disbursed portfolio of the banks up to 50 percent for T1 loans and 10 percent for T2 loans.
In the first instance, National Bank of Pakistan (NBP), Bank of Punjab and Bank of Khyber will execute the program under the guidance and supervision of State Bank of Pakistan. Subsequently, SBP will also advise other commercial banks for participation in the program. NBP will continue to play the lead role. NBP’s share in total disbursed loans will be up to 50 percent.
All sectors, Standardized schemes/ projects/ undertakings designed by SMEDA, or projects designed by private sector service providers or by individuals, themselves will also be admissible.
SBO has asked the banks to gear up their systems for successful implementation of this program and to avoid any misuse of the program.
Loan Application Forms will be available both in branches and through dedicated websites of National Bank of Pakistan, Bank of Punjab and Bank of Khyber. The standard loan application form is enclosed at Annexure-1. The banks are advised to mention their toll free number in the loan application form for the facilitation of youth entrepreneurs. Eligible borrowers may apply for the loans immediately after formal launch of the program by the Prime Minister.
The banks are also advised by SBP that with the launch of Prime Minister’s Kamyab SME Lending Program, Prime Minister’s Youth Business Loan (PMYBL) scheme would cease to exist.