The central bank on Friday allowed borrowers, who took loans under concessional refinance schemes, to delay repayment of principal amounts for up to one year, extending its relief package amid the novel coronavirus outbreak.

“With this deferment of principal, the complete repayment schedule/tenor of the loan will be extended by one year,” the State Bank of Pakistan (SBP) said in a statement. “The borrowers will, however, continue servicing their mark-up during the period of principal deferment.”

Borrowers of the SBP’s refinance schemes and their shariah-alternatives would benefit from the relaxation. The schemes under the scope include long-term financing facility, financing facility for storage of agricultural produce, refinance facility for modernisation of small and medium enterprises, refinance and credit guarantee scheme for women entrepreneurs, refinance scheme for working capital financing of small enterprises and low-end medium enterprises and small enterprise financing and credit guarantee scheme for special persons.

“In case borrowers are not able to service mark-up payment, banks/DFIs (development finance institution) may reschedule/restructure the loan in such a manner that tenure of the loan can go up to one year beyond the existing maximum tenor of the respective scheme,” the SBP said.

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Under various refinance schemes, loans are provided with preferential terms and conditions to promote growth in priority sectors of the economy. “Now, the relaxation allowed for deferment in repayment of principal amount for one year for corporate, consumer, agriculture, SMEs and microfinance sectors, will be available on financing of banks/ DFIs under SBP’s refinance schemes as well,” the SBP said.

The SBP said it has continuously been reviewing the challenges arising out of COVID-19 pandemic situation with particular reference to the financial sector and taking measures. “Expanding the scope of its recently announced relief package for households and businesses, SBP has taken another major step,” it added.

The State Bank rolled out a number of relaxations for individuals and companies in the past couple of days to help them fight over the challenges to economic activities posed by the coronavirus.

The SBP reduced its benchmark interest rate to 11 percent, in two steps in a week, taking under consideration declining consumer inflation. Lower oil prices are expected to further bring down inflation reading in the economy with its growth decelerating to 3.3 percent last fiscal year from 5.5 percent a year earlier.

Courtesy by :https://www.thenews.com.pk/