Soft loan scheme unveiled

KARACHI: The federal government has introduced a new initiative offering soft loans of up to Rs1 million for prospective overseas workers to cover training, travel and visa-related expenses.

Additionally, government has also announced to provide loans of up to Rs. 0.45 million to students, freelancers and young entrepreneurs for purchasing laptops, aiming to support their education, digital skills, and entrepreneurial endeavors.

According to State Bank of Pakistan (SBP), the Government of Pakistan has announced an expansion of the Prime Minister’s Youth Business & Agriculture Loan Scheme (PMYB&ALS) through the introduction of a new financial assistance for laptop purchases and prospective overseas workers for training, travel & visa related expenses.

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The move is designed to further broaden the scope of the scheme, targeting a wider demographic, particularly students, freelancers, and young entrepreneurs. Financing for laptop and prospective overseas workers will be provided under a new tier (as ‘Tier-4’) as per below terms and conditions by the State Bank of Pakistan (SBP).

According to the SBP, under new Tier loans, worth Rs 1 million (one million rupees) for with a loan tenor up to 5 years, will be to provide to prospective overseas workers for training, travel & visa related expenses and settlement expenses. Debt equity ratio will be 80:20 and bank rate will be KIBOR+3, while end user rate will be zero percent.

As per terms and conditions, citizens of Pakistan holding CNIC, aged between 21 and 45 years, having valid job letter/offer letter in hand or duly recruited by the arrangement through Overseas Employment Promoter (OEP) will be eligible for the loan.

The Job letter to be duly authenticated by respective Pakistan Mission abroad/Community Welfare Attaches (CWA), OEP and the Protector Office. The applicant will be required to provide details of overseas training, job offer etc. to justify utilization of funds.

In addition, under the new “Tier 4”, soft loans will also be provided for purchase of laptops to students of HEC recognized institutions and freelancers and young entrepreneurs. Any citizen of Pakistan aged between 18 and 30 years, studying in educational institutions recognized by HEC, will be eligible for the laptop loans.

An MOU will be signed between universities and banks interested in extending laptop financing. The university will refer the students to banks through the PMYP portal and banks will provide laptops to those students against the undertaking of university.

The instalments of laptop loans will be added in the fee by the universities and should be collected only through those banks which have provided loans for laptop financing. The bank will deduct their due instalments and will remit the remaining part to the respective university.

For laptop financing to freelancers and young entrepreneurs, banks will seek a business plan from the applicant to use the laptop for productive purposes as well as to assess the repayment capacity of the freelancer, young professional. The bank may also consider the joint income of the primary and secondary borrower while assessing the repayment capacity of the borrower.

Loan size for basic laptops will be Rs. 150,000 or actual cost whichever is lower, for medium laptops Rs 300,000 or actual cost whichever is lower and loan size for advanced laptops will be Rs 450,000 or actual cost whichever is lower for a period of 4-year. Debt equity ratio will be 80:20 with a bank rate for KIBOR+3, however the end user rate will be zero percent.

Under the security requirements undertaken by the university or colleges those degrees will be kept as collateral against loan facility of laptop till final settlement. For laptop personal guarantees of the family member of the borrower will also be accepted.

For financing for prospective overseas workers, a personal guarantee of the family member of the borrower will be required and the loan may jointly be booked in the name of family members residing in the country & prospective overseas work.

According to the SBP risk mitigation, the government will provide a 25 percent guarantee on first loss basis on disbursed portfolio, while all commercial and Islamic banks will provide the financing.

Copyright Business Recorder, 2025