THE widespread complaints against the tough conditions of the Prime Minister’s Youth Business Loan Scheme finally found their way into the National Assembly on Wednesday. This was expected because not every loan-seeker, particularly those from the lower income bracket, can apply for money under the scheme let alone obtain it. The initiative is probably one of the most appreciated and the most infuriating plans at the same time. The project promises to disburse Rs100bn in one year; 100,000 soft loans in the range of Rs100,000 and Rs2m amongst jobless young men and women to start their own small businesses.
Since its launch, the concept has been widely appreciated because it shows the government’s determination to take a chance and help the country’s youth access subsidised finance. But if the idea is to hold the hands of the poor, underprivileged young people, then the plan in its present form can hardly be expected to achieve this objective. The condition for loan-seekers to have a guarantor will exclude a large number of lower-middle-class young men and women with workable business ideas, who are willing to work hard to realise their dreams through the scheme. The initiative makes it mandatory for the loan-seekers to have a guarantor who can be a government employee at the level of BPS-15 or above, or someone with a net worth of 150pc more than the amount of the loan being sought. Not everyone can arrange for such a guarantor.
The ‘popularity’ of the scheme can be assessed from the number of downloads of loan application and other documents posted by the Small and Medium Development Authority on its website. By Dec 18, the number had already crossed the 5.5m mark. How the condition of guarantor is stalling the majority from applying for the loans is indicated by the negligible number of applications received by the two state-owned participating banks. So if the opposition legislators have brought the matter into the House on behalf of those who will be excluded from the scheme, the government should not be upset. It must listen to what the opposition parties, or any other stakeholder, have to say on this issue and allay their fears. Blaming the banks, whose money is involved, for tough conditions will not do. If the scheme was designed by the banks keeping their own interest before them, why is the government taking credit for it? Instead of getting emotional about criticism of the scheme, the architects of the initiative should work to find a way to accommodate those who cannot arrange guarantors and who do not have collateral for mortgage against the subsidised loan. And the solution should not put the banks’ money at risk like previous initiatives such as the Yellow Cab scheme had done.