Banks have approved loan applications worth Rs. 107.5 billion under Rozgar Refinancing Scheme introduced by the State Bank of Pakistan to prevent layoffs.
As many as 1,503 companies have availed this facility which resulted in providing monthly salaries to over 1 million employees who were at risk of losing their jobs due to financial disability of the employing company.
Out of Rs. 107 billion, an amount of Rs. 23.5 billion is for SMEs and small corporates under the risk-sharing facility guaranteed by the federal government.
Background of the Scheme
On April 10, State Bank of Pakistan introduced a refinance scheme to provide concessional credit at a 3% interest rate and generous repayment terms to any business that commits to not lay off workers for 3 months. The goal of the scheme was to provide an incentive for businesses to protect jobs.
In May, SBP complemented this scheme with a 40% percent risk-sharing facility (RSF) on a first loss basis for SMEs and small corporates (defined as a business with annual turnover not exceeding Rs. 2 billion). So far, there has been significant take-up in the scheme.
JS Bank, HBL and Bank Al-Habib Are Top Performing Banks
Amongst the banks, there is a considerable difference in the credit they have provided under the scheme. Some have been more active than others.
The rankings of the banks may be different when also using the data for lending to large corporates as some banks may be more focused on serving those segments of the market.
It should also be noted that these figures focus only on lending under the Rozgar Refinancing scheme. Some banks may be more active in other forms of SME lending which would not be reflected in the figures below.
A review of data indicates that five banks (Top Performing Five Banks) together constitute more than 61 percent share of overall approved financing amount under the Risk Sharing Facility (RSF) with JS Bank Limited at the top, followed by HBL and Bank Al-Habib. The chart of Least Performing Five Banks depicts the bottom pyramid of banks that have lagged other banks in extending financing under this risk-sharing scheme. This list includes two big banks.
A comparison of these five banks over the said period indicates that JS Bank Limited maintained its top position throughout all these five weeks, however, Habib Bank Limited improved its position to second from third since May 29, 2020. Bank Alfalah Limited also improved its position from the lowest since May 21, 2020.
Review of performance of banks w.r.t acceptance ratio in terms of amount and number of applications approved shows that Top Performing Five Banks remain in the range between 65% to 83% and 70% to 83% respectively.
The lowest-performing banks included Standard Chartered Bank, Bank of Khyber, and First Women Bank.