In its ongoing commitment to bolster economic growth and foster gender inclusivity in Pakistan, the State Bank of Pakistan (SBP) has introduced a pioneering Refinance and Credit Guarantee Scheme tailored specifically for women entrepreneurs. This initiative, aligned with the government’s economic policies, aims to facilitate greater access to finance and empower women across the country to start or expand their businesses.
Overview of the Scheme
The Refinance and Credit Guarantee Scheme for Women Entrepreneurs operates under the auspices of the SBP, providing refinancing at 0% to Participating Financial Institutions (PFIs). These PFIs, including commercial banks and Development Finance Institutions (DFIs), subsequently extend credit to women entrepreneurs at a subsidized mark-up rate of up to 5% per annum. Notably, loans disbursed under this scheme are eligible for a 60% risk coverage under SBP’s Credit Guarantee Scheme for Small and Rural Enterprises (CGS).
Key Features and Eligibility
- Scope and Purpose: The scheme supports financing for new business ventures or the expansion of existing enterprises led by women entrepreneurs.
- Financial Limits: Eligible borrowers can access financing up to a maximum of Rs. 5 million, with a repayment period extending up to 5 years, including a grace period of up to six months.
- Participating Financial Institutions: All commercial banks and DFIs registered with SBP are invited to participate, ensuring widespread accessibility of the scheme across Pakistan.
- Rate of Mark-up: Women entrepreneurs benefit from a concessional mark-up rate of up to 5% per annum, enhancing affordability and sustainability of the borrowed funds.
- Risk Coverage: PFIs receive a substantial 60% risk coverage on the outstanding principal, facilitating reduced risk exposure and incentivizing lending to this demographic.
- Geographical Focus: To promote regional inclusivity, a minimum allocation of 20% of the scheme’s limit is earmarked for women entrepreneurs in Balochistan.
- Application and Disbursement: PFIs adhere to streamlined procedures for loan evaluation, with a commitment to providing timely decisions to applicants. In cases of loan default categorized as ‘Loss’, PFIs can file for a guarantee claim under the CGS, ensuring financial recourse and sustainability.
- Monitoring and Reporting: Stringent reporting mechanisms are in place, requiring PFIs to submit comprehensive quarterly reports to SBP’s Development Finance Support Department. This ensures transparency and accountability in the scheme’s implementation and impact assessment.
Operational Framework
The SBP administers the scheme under the legal framework provided by the State Bank of Pakistan Act, 1956, ensuring regulatory compliance and adherence to prudential regulations. Refinance disbursements are contingent upon internal audits conducted by PFIs to validate compliance with scheme criteria, further reinforcing operational integrity and fund utilization transparency.
Frequently Asked Questions (FAQs): Refinance and Credit Guarantee Scheme for Women Entrepreneurs by State Bank of Pakistan
1. What is the Refinance and Credit Guarantee Scheme for Women Entrepreneurs?
The Refinance and Credit Guarantee Scheme for Women Entrepreneurs is an initiative by the State Bank of Pakistan (SBP) aimed at facilitating easier access to finance for women entrepreneurs across Pakistan. Under this scheme, Participating Financial Institutions (PFIs) receive refinancing at a 0% interest rate from SBP and provide loans to women entrepreneurs at subsidized interest rates of up to 5% per annum.
2. What are the key features of the scheme?
Scope and Purpose:
- The scheme supports women entrepreneurs in starting new businesses or expanding existing ones.
Financial Limits:
- Eligible borrowers can access loans up to Rs. 5 million with a repayment period of up to 5 years, including a grace period of up to six months.
Participating Financial Institutions:
- All registered commercial banks and Development Finance Institutions (DFIs) are eligible to participate, ensuring nationwide accessibility.
Interest Rate:
- Women entrepreneurs benefit from reduced interest rates of up to 5% per annum, making the loans more affordable.
Risk Coverage:
- Loans are eligible for a 60% risk coverage under SBP’s Credit Guarantee Scheme for Small and Rural Enterprises (CGS), reducing PFIs’ exposure and encouraging lending.
Geographical Focus:
- At least 20% of the scheme’s funds are earmarked for women entrepreneurs in Balochistan to promote inclusivity.
Application and Disbursement:
- PFIs follow streamlined procedures for loan evaluation to provide prompt decisions. In cases of loan defaults categorized as ‘Loss’, PFIs can file for a guarantee claim under the CGS.
Monitoring and Reporting:
- PFIs submit comprehensive quarterly reports to SBP’s Development Finance Support Department, ensuring transparency and accountability.
3. How does the scheme benefit women entrepreneurs?
The scheme benefits women entrepreneurs by:
- Providing easier access to finance at subsidized interest rates.
- Offering significant risk coverage, reducing financial exposure for PFIs.
- Promoting entrepreneurship and economic independence among women.
- Fostering a supportive business environment conducive to sustainable growth.
4. What is the operational framework of the scheme?
The scheme operates under the legal framework provided by the State Bank of Pakistan Act, 1956. Refinance disbursements are contingent upon internal audits conducted by PFIs to validate compliance with regulatory standards and ensure transparency in fund utilization.
5. How can women entrepreneurs apply for this scheme?
Women entrepreneurs can apply through any of the participating commercial banks or DFIs. They should contact these institutions directly to inquire about eligibility criteria, required documentation, and the application process.
6. What are the long-term benefits of the Refinance and Credit Guarantee Scheme for Women Entrepreneurs?
Long-term benefits include:
- Increased participation of women in the economy.
- Creation of employment opportunities.
- Enhanced economic growth and development.
- Strengthening of financial inclusion and gender equality.
7. Where can I find more information about the scheme?
For detailed guidelines, eligibility criteria, and application procedures, interested individuals can refer to SBP’s official circulars and guidelines available on their website or contact SBP directly through their official channels.
8. How does this scheme contribute to Pakistan’s economic development?
By empowering women entrepreneurs, the scheme contributes to Pakistan’s economic development through increased business activity, job creation, and overall economic growth. It aligns with national goals of fostering inclusivity and supporting diverse entrepreneurial endeavors across the country.
Conclusion
The Refinance and Credit Guarantee Scheme for Women Entrepreneurs signifies a pivotal stride towards gender equality in economic participation and empowerment in Pakistan. By mitigating financial barriers and promoting entrepreneurship among women, SBP not only supports individual economic independence but also cultivates a conducive environment for sustainable national economic growth.
This initiative stands as a testament to SBP’s proactive role in fostering inclusive economic development, setting a benchmark for future initiatives aimed at enhancing financial inclusivity and diversity across Pakistan’s entrepreneurial landscape. Read more at official webiste: Link