**
NBP refuses to invest in PM’s Youth Loan Scheme
**
ISLAMABAD: The National Bank of Pakistan (NBP) has informed the State Bank of Pakistan (SBP) that it cannot invest Rs100 billion in the Prime Minister’s Youth Business Loan Scheme as it involved great risk.
The NBP said that the step of lending money, if realised, would affect other departments of the bank. Therefore, it had agreed on investing Rs15 billion only in the PM’s Youth Loan Scheme.
After NBP’s excuse, the government has decided to involve private banks for lending the loans. There is a possibility that the private banks will be made to lend Rs70 billion for the venture. The process of negotiating with different banks has also been started.
It merits mentioning here that the NBP has been assigned the responsibility of releasing Rs90 billion till June 30, 2014, whereas the First Women Bank would lend Rs10 billion for the loan project.
While inflationary pressure mounted to give a push to the interest rate, the sudden increase in government borrowings from commercial banks is also going to set new records.
Since Nov.27, the government collectively borrowed about Rs1.4 trillion from the commercial banks and mostly for three-month maturity.
Internews
NBP has taken the right decision. The move was being criticised from the day one that NBP should not be made to fund the entire scheme and private banks should be made part of the drive so that the use of fund is more transparent.