Pakistan: KP Launches Rs1 Bn Islamic Micro Credit Scheme
Pakistan, July, 22 2014 -
The Khyber Pakhtunkhwa government on Monday launched Rs1 billion Islamic Micro Finance scheme to provide loans to around 170,000 people for medium and small businesses in the province.
The Islamic Micro Credit scheme will be implemented through the sole public-sector bank operating in the province, the Bank of Khyber.The provincial government on Monday signed a memorandum of understanding (MoU) with the Bank of Khyber to implement the scheme. Imran Samad, managing director of the bank and secretary Finance Khyber Pakhtunkhwa Said Badshah Bukhari, signed the MoU at a function where Chief Minister Pervez Khattak was the chief guest. Finance Minister Sirajul Haq, who is the head of the Jamaat-i-Islami, attended as the guest of honour.
The seed money of one billion rupees will be provided by the provincial government to the Bank of Khyber, which will charge its loan management fee at the rate four percent upfront to disburse the loans under the scheme.
The Bank of Khyber will also charge 15 percent recovery charges on outstanding loans. Initially, the loans would be given in Peshawar and Mardan divisions, which include the districts of Peshawar, Charsadda, Nowshera, Mardan and Swabi.
The loans would be extended to borrowers on Islamic mode of finance products such as Mudaraba, Murabaha and Ijara.According to the documents, the aim of the scheme is to extend loans to the people living below the poverty line under the Islamic mode to enable them to earn their living and alleviate the poverty in the province.
However, it would not be profit-free loan but the profit will be charged on product to product basis. Addressing the ceremony, Chief Minister Pervez Khattak said the government had initiated the agenda of change for which the Pakistan Tehrik-e-Insaf (PTI) had been voted to power.
He said the agenda of change and reforms had started with the approval of the Finance Bill 2014-15 wherein Rs1 billion Islamic Micro Credit scheme and a pro-poor project of Rs 7 billion were proposed for the welfare of the low-income population.
The poor-friendly policies of the government had started paying dividends, he argued, adding that the provincial government was showing zero tolerance to corruption in the province. “We have promulgated the Right to Information (RTI) and Right to Public Services (RPS) acts and set up the offices of chief commissioners RTI and RPS to ensure good governance in the province,” Pervez Khattak said.
He stated that the Bank of Khyber had been advised to provide hassle-free loan to applicants for small businesses under the Islamic Micro Credit scheme and ensure repayment so that the scheme could be run on self-sustained basis.
Earlier, Finance Minister Sirajul Haq said several banks were facilitating interest-free loan schemes in the country and a number of Islamic banks were operating in the country, but the Bank of Khyber was the first in the country to implement the Islamic Micro Credit scheme.