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Kamyab Jawan: key scheme for youth development

The Government of Pakistan (GoP) has launched ‘Prime Minister’s Kamyab Jawan SME Lending Program’ aimed at providing self-employment opportunities to unemployed youth. Under the scheme, the GoP will provide mark-up and credit loss subsidy on small business loans up to Rs5 million disbursed by banks to youth.

According to the scheme procedure announced by State Bank of Pakistan (SBP), all men/women holding CNIC, aged between 21 and 45 years with entrepreneurial potential are eligible for this scheme. For IT/e-commerce related businesses, the age limit will be 18 years. Under the scheme some 25 percent of the loans will go to women borrowers.

The Finance Division will allocate funds in each fiscal year’s budget as per estimates provided by the SBP and payment will be made on submission of consolidated claims of all banks by the SBP. Small enterprises (startups and existing businesses) as per definition of the SBP and owned by youth as per age brackets are also eligible.


For IT/e-commerce related businesses, at least matriculation and/or experience of at least six months. Size of the loan is segregated into two tiers. Under the Tier-1, loans will be disbursed from Rs0.1 million to Rs0.5 million, while under Tier-2, loans above Rs0.5 million and up to Rs5 million will be provided for up to 8 years with maximum grace period of up to one year.

Working capital and term loans for Tier-1 will be made available at 6 percent per annum interest rate. The federal government will pay the difference of the cost at KIBOR+500bps. Tier-2 loans will be provided at 8 percent per annum interest. The federal government will pay the difference of the cost at KIBOR+400bps. Debt to equity ratio for Tier-1 loans will be 90:10 and for Tier-2 loans 80: 20 and the borrower’s contribution of equity would be in the form of cash or immovable property and will be required after approval of the loan.

For Tier-1, only personal guarantee of the borrower will be required, while Tier-2 loans will be provided as per bank’s own credit policy. For Risk Mitigation Government will bear credit losses (principal portion only) on the disbursed portfolio of the banks up to 50 percent for Tier-1 and 10 percent for Tier-2.


In the first instance, National Bank of Pakistan (NBP), Bank of Punjab and Bank of Khyber will execute the program under the guidance and supervision of State Bank of Pakistan. Subsequently, SBP will also advise other commercial banks for participation in the program. NBP will continue to play the lead role. NBP”s share in total disbursed loans will be up to 50 percent.

All sectors, standardized schemes/projects/undertakings designed by SMEDA, or projects designed by private sector service providers or by individuals, themselves will also be admissible.

Application forms are both in English and Urdu and require minimum essential information with simple format. The processing time will not exceed 15 days and will be stated clearly in the application form. The forms would be readily available both in branches and through dedicated websites of the banks. Non-refundable form processing fee will be Rs 100 (Rupee one hundred only).


For proper monitoring of the scheme, the SBP will publish consolidated information about the loans extended under this program for information of the public on quarterly basis on its website. In case of Balochistan, at least one branch of NBP will be designated per Division. All non-designated NBP branches will also provide and receive filled application forms and dispatch them to the nearest branches.

Executing Agencies (EAs) under this program will ensure that criteria for assessing entrepreneurial potential should be developed and implemented. In case of loans for existing businesses, a robust independent verification mechanism will be introduced to ensure proper utilization of the loans. Further, for new businesses, a robust mechanism for ongoing monitoring of the loans utilization will be developed and implemented

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