SBP provides liquidity of around 1 trillion


By Adnan Rafique

ISLAMABAD: After announcing the relief package for the people affected by lock downs across the country to contain COVID-19, the State Bank of Pakistan (SBP) has so far provided liquidity relief of over Rs 1 trillion to various sectors.
According to data issued by SBP, under the Rozgar Scheme , 291,172 businesses with around 865,000 employees have so far been provided Rs 92 billion financing. Similarly 697,294 borrowers have been benefited with Rs 495 billion principal amount deferred while Rs 71 billion restructured or rescheduled. The data showed that 95 percent out of total were small borrowers.
Under the Rozgar Scheme, SBP had announce to finance up to 100 percent of wages and salaries of businesses with average three months wage bill of up to Rs 500 million. For businesses with three months wage bill exceeding Rs 500 million, SBP is financing up to 75 percent with maximum financing of Rs 1 billion.
The mark up rate has been set at 3 percent and the end rate that would be charged from the borrowers will be up to 5 percent per year. The SBP is providing refinance to banks at zero percent markup rates. Since March 17, the SBP has made drastic cuts in its interest rates by 5.25 percent to 8 percent and so far overall impact of policy rate cut is over 300 billion.
Under relief package announced by the SBP for households and businesses, the central bank has reduced the capital conservation buffer (CCB) from its existing level of 2.5 percent to 1.5 percent. This will enable banks to lend an additional amount of around Rs 800 billion, an amount equivalent to about 10 percent of their current outstanding loans Likewise the existing regulatory retail limit of Rs 125 million per SME has been permanently enhanced to Rs 180 million with immediate effect. This measure is facilitating banks to provide more loans to SMEs which currently stand at around Rs 470 billion.
For health sector, refinance facility up to Rs 500 million is being made available by SBP at 0% to banks that can charge a maximum rate of 3 percent per anum to hospitals and medical centers.