Prime Ministers Youth Business Loan Scheme

The Government of Pakistan under the label of "Prime Ministers Youth Business Loan Scheme" has taken an excellent initiative of giving loans to the general public aged between 21 and 45 years. This scheme has great potential for playing a vital role in improving the country's economy if implemented with full transparency. Its conditions of eligibility are laudable because maintaining the upper age limit of 45 years will give maximum advantage to those with skill and ability who have yet not been able to earn and contribute to the society as per their abilities. In a country where discrimination against the women is often debated and highlighted, 50% of the funds being earmarked for either of the two genders also ensures gender equality as a prime agenda of the government. Also the growing number of victims of the wave of terrorism in the past decade have been given a special 5% quota (which also includes disabled persons quota). And a great plus of the project is that anybody whether employed or un-employed can apply for a loan provided that he / she has a feasible business plan / entrepreneurial abilities. The loan can be sanctioned of any amount from Rs. 0.1 to Rs. 2.0 Million keeping in view the feasibility of the project, and the entrepreneur can use the amount for starting a new or growing an already existing business. Mark-up to be paid by the loan applicant is also 8% while 7% will be paid by the Government itself, and the maximum period for loan re-imbursement in installments is 8 years including the 1st year during which reimbursement of installments would not commence. A total of 100,000 loans will be paid and the total allocation for this scheme is Rs. 5 billion.

The Small and Medium Enterprises Development Authority (SMEDA) which has the primary responsibility of stimulating the growth of small and medium businesses in the country, has a vital role to play in this Youth Business Loan Scheme. SMEDA therefore has outlined a variety of pre-feasibility studies and business plans in eight different sectors for the guidance of the general public. BUT these pre-feasibility reports and business plans are only to help the potential entrepreneurs understand how they need to construct / design their pre-feasibilities and business plans. They could of-course apply for a business that is not mentioned in these 8 sectors outlined by SMEDA with their own business plan and pre-feasibilities on the models of those sampled by SMEDA.

No doubt, it is a remarkable step of the newly elected Government, but the only point of concern is that full transparency needs to be observed with regards to its implementation and achieving the objectives, otherwise the prevalent menace of corruption in the Pakistani Society if also is found here can cause the disastrous failure of this great and beautifully planned project. And if the corrupt hands are kept out of all the operations and procedures of this "Loan Scheme", the economy of the country will surely get a boost to a great extent (as the Prime Minister has also recently said that he and his team want to take the GDP Growth Rate of the economy upto 7% in the up-coming four years of his / their term).

Relaxation in Terms and Conditions of the Scheme

The Prime Minister has approved new relaxed terms and conditions for the loan scheme on 28th December, 2013. The new relaxed terms and conditions are;
  • The guarantor must be a person with 1.5 times the worth of loan amount and more than one persons can be the guarantors of a single applicant. A Government Servant with BPS-15 or above can also be a guarantor provided he / she has at least 8 years service or more before retirement.
  • The loan applicant can now be an account holder of any bank, whereas previously he / she was required to be an account holder in National Bank of Pakistan only.

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