Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular No. 10 of 2013
November 18, 2013 

The Presidents /Chief Executives,
All Banks

Dear Sirs/Madam,

Prime Minister’s Youth Business Loans Scheme

Small Businesses have potential to revitalize economic activity by creating employment opportunities, reducing poverty and providing economic linkages/services to the corporate sector. The growth of Small Businesses and their access to formal finance is imperative for development of economy. However, despite their strong potential, the small businesses particularly young entrepreneurs have traditionally remained credit constrained due to risk perception of banks towards these economic segments. On the other hand, the educated youth generally lacks entrepreneurial skills.

The Government of Pakistan is cognizant of this scenario and is committed towards uplifting the youth and providing them opportunities of financial independence through self employment. With this objective, the Government has introduced Prime Minister’s Youth Business Loans scheme with a mark-up subsidy and partial guarantee facility for extension of small business loans upto Rs. 2,000,000. Salient features of the scheme as approved by the Prime Minister are reproduced below:

1  Brief Description

Small Business Loans will focus on (but will not be restricted to) unemployed youth, especially educated youth looking for establishing or extending business enterprises

2  Eligibility Criteria

All men/women holding CNIC, aged between 21 and 45 years with entrepreneurial potential to apply from designated branches mapped with area of residence/business.

3  Security Requirements

One guarantor

4  Permissible Collaterals

Business hypothecation

5  Focus on Women

50% of loans will go to women borrowers

6  Debt-Equity Ratio

The borrower’s contribution of equity would be in the form of cash or immovable property and will be required after approval of the loan.

7  Loan Period

Tenor of loan upto 7 years with six (6) months grace period.

8  Pricing

8% fixed for borrower. Government will pay the difference of the cost at KIBOR+500bps

9  Risk Mitigation

Government will bear upto 5% losses on the portfolio of the bank under this scheme

10  Number of Loans


11  Size of Loan

Upto Rs 2,000,000 (Twenty Lacs)

12  Allocation in Budget 2013-14

Rs. 5 billion

13  Executing Agency

In the first instance, National Bank of Pakistan (NBP) and First Women Bank Limited (FWBL) under the guidance and supervision of State Bank of Pakistan. SBP to ensure participation of private banks:
a) Private banks will be required to participate in this scheme on the basis of soundness of business proposals; and
b) SBP will encourage private banks to build this portfolio commensurate with their size.
c) SBP will arrange appropriate training for private banks to implement this scheme.
d) NBP will continue to play the lead role.

14   Sectors and Products

All sectors. Standardized schemes/ projects/ undertakings will be designed by SMEDA, projects designed by private sector service providers or by individuals themselves will also be admissible.

Role of SMEDA:

a) The 50 feasibilities prepared and uploaded by SMEDA will be extensively publicized and their access to public made easier through multiple linkages with other relevant websites.
b) SMEDA will work closely with Punjab Information Technology Board (PITB) to ensure that the schemes are accessible to those who participated in the PITB survey.

15  Application Form

The Form would be both in English and Urdu; and require minimum essential information with simple format.
The processing time will not exceed 15 days and will be so stated clearly in the application form; and
The forms would be readily available both in branches and through dedicated websites of the banks.
Non-refundable form processing fee will be Rs. 100 (One Hundred).

16  Monitoring

SBP will publish consolidated information about the loans extended under this scheme for information of the public on quarterly basis on its website;
An effective Complaint Center to process and resolve complaints will be set up;
E-government directorate of Ministry of IT will provide support

17  Geographical distribution

Whole of Pakistan. In case of Balochistan, at least one branch of NBP will be designated per Division.
All non-designated NBP branches will also provide and receive filled application forms and dispatch them to the nearest branches.

State Bank will monitor implementation of the scheme through Weekly, Monthly and Quarterly reports. The banks are advised to gear up their systems for successful operations of this scheme and to avoid any misuse of the scheme.

Application Forms for the loans under this Scheme will be available on NBP and FWBL’s websites and eligible borrowers can apply for the loans immediately after formal launch of the Scheme by the Prime Minister.


Yours faithfully,

(Syed Samar Hasnain)

About SBP
Economic Data
Press Releases
Laws & Regulations
Monetary Policy
Help Desk
SBP Videos
SBP Welfare Trust
Contact us
What's New?
Online Tenders
Web Links

Educational Resources
Regulatory Returns
Rupey ko Pehchano
Zahid Husain Memorial Lecture
Best view Screen Resolution : 1024 * 768
Copyright © 2016. All Rights Reserved.