The federal government revised the terms and key features of the youth loan scheme claiming to make it more purposeful and beneficial for small businesses and agriculture.
The scheme has been renamed as Prime Minister’s Youth Business & Agriculture Loan Scheme (PMYB&ALS) from Prime Minister’s Kamyab Jawan SME Lending Program.
According to the circular by the State Bank of Pakistan (SB), new components of interest-free microloans and agriculture loans have been added to the scheme.
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Eligibility Criteria
All citizens of Pakistan holding CNIC, aged between 21 and 45 years with entrepreneurial potential are eligible. For IT/E-Commerce related businesses, the lower age limit will be 18 years and at least matriculation or equivalent education will be required.
The above age limit condition applies to individuals and sole proprietors. In the case of all other forms of business including partnerships and companies, only one of the owners, partners, or directors must be in the age bracket prescribed above. Small and Medium Enterprises (startups and existing businesses) owned by youth as per the above-mentioned age brackets are also eligible.
In the case of agriculture, farmers’ classification as per SBP’s “Indicative Credit Limits & Eligible Items for Agriculture Financing 2020” will be applicable. This feature has been added to the revised scheme.
Loan Size
The size of the loan is segregated into 3 tiers, as under:
Tier 1 (T1): Up to Rs 0.5 million
Tier 2 (T2): Above Rs 0.5 million and up to Rs 1.5 million
Tier 3 (T3): Above Rs 1.5 million and up to Rs 7.5 million
Bank Rate and End User Rate
T1: KIBOR+9% which includes wholesale lenders’ margin of KIBOR+1% and Microfinance Banks (MFBs)/Microfinance Institutions (MFIs) margin of 8%.
T2 & T3: KIBOR+3% Six months KIBOR offer will be used for calculation of mark-up subsidy.
T1: 0%
T2: 5%
T3: 7%
Loan Type
A customer may avail a maximum of two loans (including one long-term and one short-term loan) within the overall maximum financing limit of Rs 7.5 million. In the case of agriculture, a customer may avail of one production loan and one development loan within the overall maximum financing limit of Rs 7.5 million.
All sectors and products are covered in the scheme. Moreover, in the case of agriculture, all crop and non-crop sectors (including crop production, livestock, poultry, fishery, dairy, etc.) are also eligible.
Loan Type
A customer may avail a maximum of two loans (including one long-term and one short-term loan) within the overall maximum financing limit of Rs 7.5 million. In the case of agriculture, a customer may avail of one production loan and one development loan within the overall maximum financing limit of Rs 7.5 million.
All sectors and products are covered in the scheme. Moreover, in the case of agriculture, all crop and non-crop sectors (including crop production, livestock, poultry, fishery, dairy, etc.) are also eligible.
Monitoring
SBP will devise a mechanism in conjunction with Finance Division and banks on monitoring the subsidy budget and setting triggers. SBP will also publish consolidated information about the loans extended under the scheme for information of the public on a quarterly basis on its website.
The processing time will not exceed 45 days and will be stated clearly in the application form. The non-refundable form processing fee will be Rs. 100/- inclusive of the NADRA online CNIC verification fee.
The banks/DFIs/MFBs are advised to gear up their systems for the successful implementation of this scheme and to avoid any misuse of the scheme.
Eligible borrowers may apply for loans on PM Youth Portal immediately after the formal launch of the scheme by the Prime Minister’s Office.
