The Prime Minister’s Kamyab Jawan Youth Loan Scheme (PMJK-YES), which was started by former Prime Minister Imran Khan, has been changed a lot by the current government, which is led by Prime Minister Shehbaz Sharif.
The current government has changed the name of the program to the Prime Minister’s Youth Business and Agriculture Loan Scheme (PMYB&ALS). Here are the main parts of the program that have been approved by the Government of Pakistan.
Eligibility Criteria for Imran Khan Youth Loan Scheme
- Pakistani citizens between the ages of 21 and 45 who are interested in business and have a valid CNIC can apply.
- To work in an IT/E-Commerce business, you must be at least 18 years old and have a high school diploma or the foreign equivalent.
- The rule about the minimum age applies to both single businesses and single people. All other types of businesses, like partnerships and corporations, only need one owner, partner, or director in the age range above.
- Small and medium-sized businesses whose owners are under the age of 35 are also eligible.
- In the case of farming, farmers will be put into groups based on the SBP’s “Indicative Credit Limits and Eligible Items for Agriculture Financing 2020.”
The loan size is divided into three tiers, as follows:
- Tier 1 (T1): Rs 0.5 million and above
- Tier 2 (T2): More than Rs 0.5 million but less than Rs 1.5 million
- Tier 3 (T3): More than Rs 1.5 million but less than Rs 7.5 million
The updated Prime Minister’s (PM) Youth Business & Agriculture Loan Scheme, which used to be called the PM’s Kamyab Jawan Youth Entrepreneurship Scheme, has the following loan terms.
- A T1 loan can be paid back in fixed, equal monthly payments over a maximum of 3 years. A crop loan, on the other hand, can last up to a year and can be paid back in one lump sum on or before the loan’s maturity date, which is tied to the growing season.
- Long-term or development loans (T2 and T3) can be for up to 8 years, with a grace period of up to 1 year.
Under T2 and T3, the term for working capital/production loans and Murabaha can be up to five years. Meanwhile, banks will be able to give working capital/production loans with a payback period of up to 5 years, with only the markup due in the first 2 years and both the principal and markup due in the following 3 years.
- Term loans and working capital loans, such as Murabaha, and the leasing or financing of machinery and vehicles made locally for business use.
- Each borrower is only allowed to have one car. A borrower in the food franchise and distribution business can get financing for more than one vehicle.
- Up to 65% of the total amount of money that can be borrowed can be used for Civil Works.
- For agriculture, production, and development loans are eligible.
- T1: KIBOR + 9%, which includes a margin of 1% for wholesale lenders and 8% for microfinance banks and institutions.
- T2 & T3 – KIBOR+3%
The KIBOR offer for the next six months will be used to figure out the mark-up subsidy.
Allocation in Budget
The revised PM’s Kamyab Jawan Youth Entrepreneurship Scheme (YES) will get money from each fiscal year’s budget, based on estimates from the SBP. Payments will be made every three months when the SBP sends in a list of claims from all banks.
Focus on Women
According to the details, 25% of the loans under the Prime Minister’s (PM) Youth Business & Agriculture Loan Scheme (PMYB&ALS) will be given to females.
The government will pay for credit losses (just the principal part) on the loans that banks have already given out.
- T1: Up to 50%, which includes 40% for wholesale lenders on a “pari-passu” basis and 10% for MFBs/MFIs on a “first loss” basis.
- T2: Up to 25% based on the first loss
- T3: Up to 10% based on the first loss
Here is how security will work:
- T1: Spotless (secured only by the personal guarantee of the borrower).
- MFBs/MFIs must also follow the rules and regulations of SECP/SBP.
- T2: Okay (secured only by the personal guarantee of the borrower).
- T3: Based on the bank’s rules.
The vehicle(s) financed under T1, T2, and T3 will be used as security.
End User Rate
- T1: 0%
- T2: 5%
- T3: 7%
For startups, the debt-to-equity ratio is 90:10 for Transitions 1 and 2, and 80:20 for Transition 3. After the loan is approved, the borrower will have to make an equity contribution in the form of money or a non-movable asset.
For businesses that already exist, there is no need for a debt-to-equity ratio.
Number of Loans Per Borrower
A customer can get up to two loans, one long-term and one short-term, but the total amount they can borrow is capped at Rs. 7.5 million.
In the case of agriculture, a customer can get one loan for production and one loan for development, up to a total of Rs 7.5 million.
Sectors and Products
All industries and goods. In agriculture, all crop and non-crop sectors are eligible, including crop production, livestock, poultry, fishery, dairy, etc.
Executing Agency (EA)
All commercial banks and Islamic banks should join.
Banks and DFIs are encouraged to act as wholesale lenders and give money to MFBs and MFIs so they can make more loans under T1.
Under T1, loan applications will only be processed and money will only be given out through MFBs/MFIs chosen by the wholesale lenders.
How to Apply for Youth Loan Scheme
Through the PM Youth Program (PMYP) Portal, applicants must fill out a standard online application form. This makes sure that monitoring is done well. As with the portal, the form would be available in both English and Urdu.
The site was made so that applicants could quickly send their applications to the right places. The Ministry of IT and Telecommunications’ National Information Technology Board would be in charge of hosting and running the portal.
The portal will only be accessible to people who are allowed to use it for certain reasons. For example, people will only be able to use it to apply for loans, banks will only use it to receive applications, SMEDA will only use it to help guide and hold their hands when needed, and the PM Youth Office will only use it to get information for monitoring purposes.
IT auditors with a lot of experience will also check the portal from the outside once a year. This will be done to make sure that the online portal is only used for its intended purpose by the right people and that any unauthorized use of the online portal is found quickly.
How long it takes to do something
The application form will make it clear that the processing time will not be longer than 45 days. The fee for processing the form, which is non-refundable, will be Rs. 100. This fee includes the fee for NADRA online CNIC verification.
SBP will work with the Finance Division and banks to come up with a way to track the subsidy budget and set triggers.
SBP will also post information about the loans given out under the scheme on its website every three months so that the public can learn more about them.
The revised Prime Minister’s (PM’s) Kamyab Jawan Youth Entrepreneurship Scheme (YES) or PM’s Youth Business & Agriculture Loan Scheme (PMYB&ALS) will be given to all of Pakistan.
In Balochistan, at least one NBP branch will be set up in each Division.
Taking more steps
Executing Agencies should make sure to take the following extra steps:
- Criteria should be made and used to figure out how entrepreneurial someone is.
- For loans to businesses that already exist, a strong, independent verification system could be put in place to make sure loans are used correctly.
- For new businesses, a strong way to keep track of how the loans are being used should be made and put into place.
- A full monitoring and evaluation framework could be made to find out how the scheme is working, especially in terms of the direct jobs that are created by the beneficiaries.
- The Prime Minister’s Office for Youth Affairs could hire a company to audit, evaluate, and keep an eye on the scheme.
- The SBP has told the banks, DFIs, and MFBs to get their systems ready for this scheme to work well and to stop anyone from abusing it.
After the scheme is officially launched by the Prime Minister’s Office, people who qualify can apply for loans on the PM Youth Portal right away.