KARACHI: Banks extended Rs8.145 billion in credit to the unemployed youth under the Prime Minister Youth Business Loans (PMYBL) scheme during the second quarter (April to June) of the current calendar year, registering 10 percent growth over the previous quarter, the central bank said on Friday.
Banks lent Rs7.429 billion in loans to the youth in January-March 2016, said the State Bank of Pakistan (SBP) in its quarterly review on Prime Minister Youth Business Loans. Total number of Prime Minister Youth Business Loansbeneficiaries stood at 8,472 in the second quarter as against 7,816 in the first quarter.
Analysts said the low-cost lending to jobless youth is rising as more banks are joining the scheme for creating start-ups and extending the business enterprises for the young people. Terms for the repayments of the loans are also generous, they said.
Some analysts, however, said though the credit availability for the youth is better than a year ago banks are still reluctant to increase their exposures due to the risks in such loans. The SBP said the National Bank of Pakistan lent Rs7.775 billion to the youth and followed by the First Women Bank (Rs157 million).
However, the private lenders, working as executive agents, provided the credit worth Rs214 million. Under the scheme, the banking system is providing a loan of up to two million rupees to the unemployed youth for setting up or expanding a business at a six percent service charge per annum.
The rate of return for banks is one year Karachi Interbank Offered Rate plus 500 basis points with the rate to be reset every year. Portfolio risk coverage of up to five percent is also available under the scheme for the banks.
In Apr-Jun quarter, the number of PMYBL executing agencies increased to 18. Prime Minister Youth Business Loans data indicated that the participating banks received 7,679 applications under the scheme during the quarter under review. Total numbers of applicants rose to 71,644; of that, shares of male and female applications are 86 and 14 percent, respectively.