Govt markup rate on loans to provinces, SOEs raised

The government has increased the markup on development loans and advances to the provincial, local bodies, state-owned enterprises (SOEs) and public sector financial institutions by almost one percentage point for the previous fiscal year, which ended on June 30.

According to a circular issued by the Finance Division (budget Wing) final rates of mark-up chargeable on; (i) cash development loans to the provincial governments; (ii) loans to local bodies, financial and non-financial institutions and other Corporations; (iii) capital outlays of the federal government in the commercial departments have been fixed by the federal government for fiscal year final rate of mark-up (per annum) for fiscal year 2019-20 at 12.20 percent, 2020-21 at 10.30 percent and 2021-22 at 11.20 percent.

The circular stated that in case of loans and advances for purchase of conveyance and house building, the final rate of mark-up, ie, 11.20 percent per annum, has been fixed for the Fiscal Year 2021-22. In a notification, the finance ministry has fixed the markup rate for the 2021-22 fiscal year at 11.2 per cent, up from 10.30pc a year ago.

The federal government charges these markup rates on cash development loans to the provincial governments, Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan, besides loans extended to local bodies, public sector entities (PSEs), corporations, autonomous bodies, financial and non-financial institutions and capital outlays of the federal government in the commercial departments. Since the 2017-18 fiscal year, the markup charged by the federal government has increased from 6.62pc.