The relief schemes introduced by the State Bank of Pakistan in the last few weeks have proven to be popular with cash-strapped borrowers, as over 85,000 submitted their applications for easing off their loan repayments during the economic slowdown.
State Bank of Pakistan has claimed that the commercial banks have received 85,494 applications from their borrowers in recent weeks in which 80,368 borrowers were given relief till April 10 whereas the remaining cases of 5,126 are under process.
Overall, borrowers availed a deferred payment facility of Rs. 20 billion whereas a small section got their loans of Rs. 1.4 billion restructured under the announced relief scheme by the central bank.
According to the scheme, banks and DFIs will defer the payment of principal on loans and advances by one year of borrowers from corporate, consumer, agriculture, SMEs and microfinance sectors.
They will, however, continue to service the markup amount as per agreed terms and conditions. The deferment of the principal will not affect the borrower’s credit history and such facilities will also not be reported as restructured/rescheduled in the credit bureau’s data.
For borrowers whose financial conditions require relief beyond the extension of principal repayment for one year, SBP has relaxed the regulatory criteria for restructuring/rescheduling of loans.
It is pertinent to mention here the total amount of principal due over the next year is about Rs. 4,700 billion.
The prevailing situation of an economic slowdown following the lockdown to combat COVID-19 has broken the financial backbone of businessmen, entrepreneurs and individuals as a majority of them have become incapable to pay their loans on time.
SBP, on its timely relief schemes, provided a cushion to a significant number of borrowers that will likely be availed by thousands of others in the coming months.