The State Bank of Pakistan’s Rozgar Refinance Scheme will protect 1.1 million jobs, the central bank tweeted on Monday.
The SBP says as of mid May, 1,700 businesses have applied to commercial banks to benefit from this scheme, which will provide Rs120 billion in loans at a discount rate to help prevent more than 1.1 million jobs being lost.
“Of the total applications received, about Rs61 billion representing 600,000 jobs has already been approved and the rest are in process,” the bank said. Businesses that benefit from this scheme commit to not lay off workers for three months, it added.
Launched on April 10, the SBP Rozgar scheme aims to create incentives to prevent layoffs under the coronavirus lockdown. It targets small and medium enterprises that employ a large number of people. It provides subsidized (cheaper) loans to business so they can pay salaries, binding them not to lay off any worker for three months.
Since its launch, the central bank has modified and scaled up this scheme to allow more incentives to businesses and banks as fears regarding recession and ensuing unemployment have grown. The applicant (business owners) can take a bank loan at cheaper rates of 3% (for filers) and 5% (non-filers). The SBP’s benchmark interest rate is 8% and commercial banks charge higher than that.