Undeterred by the discouraging results of the yellow cab scheme, laptop scheme and sasti roti scheme, the PML-N has decided to go bigger, not necessarily better, with the newly launched Prime Minister’s Youth Business Loan Programme. On the surface, it’s all quite simple. Under this whopping billions-worth initiative, aspiring entrepreneurs will be granted business loans with an 8% mark-up, to be recovered in equal monthly instalments over a period of 8 years. The loans will be granted from state-owned banks, of course, namely National Bank of Pakistan (NBP) and First Women Bank Limited (FWBL). Their compliance should not be confused with their confidence in the adventure. It’s just extremely hard to turn down personalities who hold the power to shift one overnight from the exclusive, happily-employed club to the large pool of the unemployed. A bit of moaning is acceptable as long as one gives in eventually.
Attempting to dispel doubts concerning the recovery of the loans to be granted under the programme, Federal Minister for Information and Broadcasting, Senator Pervaiz Rashid, claimed that a 98% recovery rate was recorded in the yellow cab scheme. In other words, the scheme had a 2% non-performing loan record. But this is an imaginative statistic, one unexpected from someone as careful and usually reserved as Mr Rashid. Even the data provided by the State Bank of Pakistan suggests that the average of non-performing loans across public and private institutions stands at roughly 7%. Industry experts claim that the average is closer to 15%. They are also in agreement that public schemes such as the one in question have historically performed even worse in terms of loan recovery for banks and thus, have happily decided to watch it all unravel from a safe distance, instead of throwing in their lot with government owned banks. But, that is a luxury reserved for the private sector. State-owned NBP and FWBL have received a lengthy lecture on Corporate Social Responsibility (CSR) in response to their concerns over the probable adverse financial outcomes of the programme.
The ‘lecturers’ are advised to learn the vast difference between a bank and a charitable organisation. For starters, one is a business which relies on profits to survive and the other behaves in a manner in which NBP and FWBL are being forced to. A fundamental requirement for exercising CSR is making decisions that maintain the right balance between the society and the bank’s business. They cannot simply start handing out money to people all over the country because the government has its eyes set on the upcoming Local Body Elections. Forget CSR, what about some good, old political responsibility? A bit of that would be nice.