KARACHI: Banks have disbursed an amount of Rs26.76 billion under Prime Minister’s Youth Business Loans (PMYBL) till June 30, 2019 as against the amount of Rs25.13 billion disbursed till June 30, 2019.
The number of borrowers has been increased to 26,679 by end June 2019 as compared with 25,128 borrowers by end June 2018, State Bank of Pakistan (SBP) said on Friday.
The government, being cognizant of the important role played by youth and small businesses in the economic development, introduced Prime Minister’s Youth Business Loans (PMYBL) Scheme in 2013 with the aim of providing youth the opportunities of financial independence through self-employment.
Under the Scheme, small businesses are provided loans up to Rs 2,000,000/- at a service charge of 6 percent p.a.
Total number of applications received by the Executing Agencies (EAs) under PMYBL Scheme as of June 30, 2019 stood at 101,938. Of the total applications received so far under the scheme, 88 percent were from male applicants.
Moreover, since launch of the scheme, number of sanctioned applications stood at 33,145 as on June 30, 2019, while cumulative disbursements of Rs 26,760 million had been made to 26,679 beneficiaries till June 30, 2019.
The SBP said that small businesses have potential to revitalize economic activity by creating employment opportunities, reducing poverty and providing economic linkages and services to the corporate sector.
The growth of small businesses and their access to formal finance is imperative for the development of economy.
However, despite their strong potential, the small businesses, particularly of young entrepreneurs, have traditionally remained credit constrained due to high risk perception of banks towards them.
The government introduced Prime Minister’s Youth Business Loans (PMYBL) Scheme in 2013 for providing the opportunities of financial independence to youth through self-employment.
Under the scheme, unemployed youth are extended loans upto Rs 2,000,000/- at a service charge of 6 percent p.a. for setting up new business or strengthening existing business.
The rate of return for lending banks is one year KIBOR+500 bps. Difference of banks’ rate and borrowers’ rate is being absorbed by the federal government in the form of subsidy.
As a further incentive to the banks, GOP also shares 5 percent of credit losses of total outstanding loan portfolio of the banks under the scheme.
Currently, eighteen banks are participating in the scheme, of which three are public sector banks (NBP, FWBL and Sindh Bank Limited) while the remaining fifteen are private sector banks.
