Rs30.80 billion disbursed to 893,000 borrowers under interest-free loan programmes

Islamabad-The government has distributed loan of around Rs30.80 billion in 110 districts of the country under Interest free loan programmes since July 2019. An interest free loan of Rs30.80 billion were distributed among 893,000 deserving people of 110 districts in Pakistan since July 2019, said SAPM Dr. Sania Nishtar yesterday.

The loan is being provided for poultry farming, fish farming, manufacturing, engineering, beauty parlors, barber shops etc. Among the beneficiaries of the Interest Free Loan 46 percent were women, she said.  Pakistan Poverty Alleviation Fund (PPAF) is the implementing agency of the Ehsaas initiative which provides loans through partners-Akhuwat being the largest of the 24 partners.

Under Ehsaas strategy, Interest free loans are a major component of the National Poverty Graduation Initiative. It aims to graduate the poorest households out of poverty and set them on a course of economic and social prosperity. As part of Ehsaas framework, 80,000 interest free loans (50 per cent women) are being disbursed every month across Pakistan. The range of the interest free loans is Rs20,000–Rs.80,000.

During the next 4 years as many as 3.8 million interest free loans will be provided to 2.28 million households. In total, 14.7 million people will benefit from this component. Selection of beneficiaries is based on the Poverty Score Card used by the government and donors. Any Pakistani aged between 18-60 years belonging to 110 districts can apply for interest free loans. Interest free loans are accessible through 1100 existing loan centres operated by partnering organisations. As additional districts are added, new loan centres will be established.

Since the launch of Ehsaas Interest Free Loans in July 2019 till September 14, 2020, the loans of Rs30.80 billion have been disbursed to 893,000 borrowers (including 46 percent women). 

Meanwhile a press statement issued here stated that under the overarching Ehsaas framework, BISP becomes the first organization in the social sector institutions of the government to adopt modern and efficient way of maintaining its financials on International Public Sector Accounting Standards (IPSAS) Accrual basis. In line with the Ehsaas Governance and Integrity Policy that is binding on the Poverty Alleviation and Social Safety Division (PASSD) and its ancillary organizations, books of accounts within BISP are being shifted from legacy cash to accrual basis.

Adopting accrual accounting for financial reporting is intended to further the credibility and resilience of public finances and helps to unlock the benefits of programme’s assets. This will also guide the policy making stakeholders to better evaluate performance of the Ehsaas programme in terms of the cost of services, effectiveness, and accomplishments. Alongside, it will set a clear direction around how successful it is in managing its resources, rationalizing expenditures, and providing an accurate view of the financial statements, which enables comparison and financial analysis.

Commenting on this institutional reform, SAPM Dr. Sania Nishtar said, “Sitting under the umbrella of Ehsaas, BISP has successfully launched first phase of transition to accrual accounting for improving financial planning and management in accordance with best international practices.” Continuing, she said, “This systematic transition will pave the way to ensuring rule-based control on the use of public resources. It will deliver true performance measurement of the programme in accordance with the best international standards.”

This major shift in the accounting systems is taking place during the current year in collaboration with partnering Chartered Accountant Firm. Besides, BISP is intending to use ERP platforms in future, for integrated financial management system. Understanding the entity’s operations and the types of transactions which flow through an entity is key to understanding the potential impact of accrual accounting. By determining the types of inherent transactions along with the associated data flows, policies, and processes to account for those transactions on an accrual basis can be drawn up and integrated into the entity’s financial management and reporting procedures. This information also highlights those areas where, perhaps, significant change will be required and gives some idea of the impact of that change.

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