Businesses urge SBP to provide easy loans to pay wages

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KARACHI: The Federation of Chambers of Commerce and Industry of Pakistan (FPCCI) on Saturday urged the central bank to extend concessional loans for the payment of wages by one year.

“Since companies that have used this credit facility through banks have not been recovered from the devastating economic impact of COVID-19, it would be desirable for SBP to extend this program for one year,” said Nasser Hyatt, president of the FPCCI, said in a statement.

In April last year, the SBP introduced a temporary refinancing program for companies to support the employment of workers in the face of the economic challenges posed by the coronavirus lockdown. Its main goal is to encourage companies not to lay off their workers during COVID-19.

Hyatt said the central bank’s refinancing program has helped many industrial and service-oriented sectors retain their employees during the period of the corona pandemic. Under this program, 238 billion rupees was paid to the private sector. The objective of this system is to prevent layoffs by financing the wages and salaries of employees (permanent, contractual, daily bets as well as outsourced) for all types of companies with the exception of government entities, public sector companies. , autonomous bodies and deposit-taking financial institutions.

The program is available to all businesses in Pakistan through banks and covers all types of employees including permanent, contract, daily wages as well as contract workers.

Since the government-imposed lockdown in March, the SBP has taken a number of measures to mitigate the impact of COVID-19 on the economy, including a one-year extension of loan principal repayment, concessional financing for companies for the purchase of equipment.

He has earmarked at least 100 billion rupees for emergency measures.

The system made it possible to finance expenditure on wages and salaries for three months from April to June 2020 for companies.

The SBP designed the program to give preference to small businesses. Businesses with a 3-month salary and salary expense of up to Rs 200 million can benefit from their full fundraising expense, while those with a 3-month salary expense of over Rs 500 million can benefit. up to 50 percent of their fees. Mid-tier companies can benefit up to 75 percent of their 3-month salary expenses.

Banks were also urged not to charge any loan processing, credit limit fees, or prepayment penalties for loans under the new program. Under this program, a six-month grace period would be granted to borrowers while principal repayment would be made in two years.

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