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Khyber Pakhtunkhwa Government Initiatives Khud Kafalat Scheme interest-free loans

Government initiatives Scheme


To overcome the soaring problems of unemployment and poverty, by fostering micro scale enterprising / income generating activities, in shape of soft (interest free) loans for socio-economic development in Khyber Pakhtunkhwa.

Khyber Pakhtunkhwa Government Initiatives Khud Kafalat Scheme interest-free loans

Introduction to GI Schemes

GoKP approved the following 6 schemes in partnership with BOK for nurturing small & medium scale enterprising:

  • Bacha Khan Khpal Rozgar Scheme: To encourage socio economic development, provide platform for income & employment generation in socially marginalized sections of KPK through the provision of Soft Loans
  • Riwaiti Hunermand Rozgar Scheme: To revive traditional Artisanship / Skill Craftsmanship, through provision of Soft Loans.
  • Long Term Financing Facility for Industrial Development: To provide substantial opportunities to the private sector for investments, industrial development and exports promotions.
  • Roshni: In wake of the current situation of energy starvation in the province particularly and in the country overall, the scheme is aimed to provide substantial opportunities to the private sector for investments & industrial development in the sector of Solar Panels productions.
  • Khud Kafalat Scheme: To overcome the massive unemployment resulting from the effect of Terrorism, Devastating Floods and Economic Recession and to facilitate and promote entrepreneurship in order to generate economic activities in the province.
  • Youth Challenge Fund: To encourage local entrepreneurship in the Province and is purely aimed to plunge the feasible opportunities for the creation of entrepreneurship and jobs.
  • Merger of Government Initiatives Schemes On November 07-2013, GoKP, signed a new MoU with BOK, under which the three previous schemes i.e. Bacha Kkhan Khapal Rozgaar Schemes, Pakhtunkhwa Hunarmand Rozgaar Schme & Rawaiti Hunarmand Rozgaar Schmes have been merged into “Khud Kafalat Scheme”.
    Government Initiative Schemes Commencement and Cut-Off Date
S.No. Scheme Commencement Date Cut Off Date
1Bacha Khan Khpal Rozgar Scheme (BKKRS)2011-02-1515.02.2012 31.01.2013 (Ext)
2.Pukhtunkhwa Hunarmand Rozgar Scheme (PHRS)12.09.201115.11.2012
3.Rewaiti Hunarmand Rozgar Scheme2013-02-2828.02.2013
4.Long Term Financing Facility (LTFF)04.12.201230.06.2013 31.12.2013(Ext)
5.Khud Kafalat Scheme (KKS)07.11.201328.02.2014
7.Youth Challenge Fund(YCF)13.11.201431.01.2015

Scheme Wise Funds Received

S.No. Scheme Amount (millions)
1.Bacha Khan Khapal Rozgar Scheme (BKKRS)2,520
2.Pukhtunkhuwa Hunarmand Rozgar Scheme (PHRS)1,033
3.Rewaiti Hunarmand Rozgar Scheme165
4.Long Term Financing Facility (LTFF)500
5.Khud Kafalat Scheme (KKS)1,015
7.Youth Challenge (YCF)120
Total 5,653
Fund Revolved from Recovery to KKS2,277


GoKP initiated this scheme in order to promote the development of Industrial Infrastructure in war battered and insurgency plagued province of KP and to encourage public-private partnership to revitalize and expand the industrial base of the province that would help channelizing energies toward prosperity and economic wellbeing. The financial support (total of Rs. 1.00 Billion) had been envisioned for the following: a. Labor intensive industries, export oriented and import substitutive. B. Green Field Projects i.e. Establishment of new enterprises, expansion / balancing, modernization and Replacement proposals that could generate new employment avenues.


The scheme was launched by GoKP with BoK in order to harness in solar energy by providing soft term loans to the Industrial Sector involved in manufacturing Solar Panels but till deadline no applications has been received in this scheme after advertisement. It has been suggested to Secretary IC&TE for necessary amendments & fine tunings of the policies & target market in wake of the emerging market trends.

Funds Received300 Million
Applications Received
Applications Approved
Applications Declined
Applications Disbursed
Applications Pending
Cases Adjusted
Amount Disbursed
Current Balance300 Million


The scheme was launched by GoKP on 05.03.2012 for advancing loans to Small and Medium Enterprises in the province in collaboration with KP Chamber of Commerce and Industry, Peshawar. Advances shall be provided for working capital requirements and purchase of machinery/equipment and balancing, modernization & replacement (BMR) as per 40% for Trade and Services Sector & 60% for Industrial Sector. Working Capital Loans: Working Capital loans shall be provided to SME and Trading & Services Sectors as under: Type Running Finance Maximum Loan Size – Trading & Services Sector Rs.300,000 – SME Sector Rs.500,000 Tenure 3 Years only Markup 9% per annum Security Two PGs and recommendation from KPCCI Demand Finance DF loans shall be provided to SMEs who intend to rehabilitate their existing units by additional machinery or fixed investment Type DF Maximum Loan Size Rs.1.5 million Tenure 5 Years Markup 9% per annum Grace Period 18 months Security Two PGs and recommendation from KPCCI, equitable mortgage


Launching Date November 13, 2014
Last date of Submission of Application January 31st, 2015
Total Allocated Fund Rs.120 Million
Fund Received Rs.120 Million
Fund Available for Disbursement Rs.115.200 Million
Loan Range Rs.200,000 to Rs.2,000,000
Application Received 1,418
Applications approved 113
Applications declined 1305

Applications Status (as of 29.11.2016)

Scheme Application Received Application Declined Approved Application in Process
Total 110,07157042470316,015
*Pending applications from previously launched schemes, BKKRS, PHRS,RHRS, totaling 25,793 were merged into one Scheme, i.e. KKS.

Executive Summary of BoK Micro Finance Initiatives

The economic landscape of the province Khyber Pakhtunkhwa is characterized by a number of small & medium scales economic activities which are scattered throughout the province. However, financing & business needs of these entities previously had not been streamlined. The most eminent reason among many was not having a formal financial framework due to which most of the small scale entrepreneurial entities were left exclusive. Micro Financing is attributed as an effective driver in economic uplift. BoK, since 1995, despite stark challenges, felt a dire need to converge efforts on this informal but significantly potential sector. BoK for the mentioned purpose spearheaded indigenously in diversifying its scale of operations with a Financially Inclusive strategy to encompass the left outs of the formal financial circuit. A dedicated unit was set for the investment and uplift policies of the aforementioned sector and launched diversified sector-oriented products & services – primarily targeting rural base- in collaboration with local and international partners through financial & technical assistance:

  • Asian Development Bank (ADB)
  • International Fund for Agricultural Development (IFAD)
  • German Development Bank (KFW)
  • Swiss Agency for Development Cooperation (SDC)
  • Pak-Swiss SSEP
  • World Bank
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In succeeding years, BoK’s micro-financing unit extended its portfolio from sector-based initiatives to individuals that had encouraged the informal sectors of self-enterprising: financially & entrepreneurially, that are now grown into sustainable cluster based ventures. Hitherto, BoK successfully brokered bilateral initiative with Government of Khyberpakhtunkhwa for inculcating micro scale sustainable socio-economic uplift via fostering self-enterprising. The comprehensively successful implementation of the initiative, throughout the province, procured formidable recognition to the services of BoK. The successful endeavor helped in implementing similar broad spectrum initiatives for catering to various individual needs. Apart from individuals, sector-based uplift programs i.e. Industrial Revitalization and Alternate Energy Production initiatives were executed by GoKP via BoK. BoK is also in liaison with GoKP for another pioneering milestone of launching Micro-Finance product under the Islamic injunctions that would prove to pay its highest dividends in the coming future. By leaps and bounds; the erstwhile unit of Micro-Financing has now transformed into a full-fledged division: Islamic Micro Finance and Government initiatives, with five operational departments and outreach to the most remote districts of the province. It is the untiring efforts, dedication, and acknowledgment of IMF& GID that it is in now acting as a catalyst in drafting the Foreign Aid Strategy to GoKP. Thus, BoK is now a pioneer public sector bank with a dedicated arm to provide financial and entrepreneurial-advisory and expertise related to Micro & Medium Scale Financing. The Bank is mandated by its Act to support socio-economic development processes Lack of institutional framework for delivery of micro credit 90% of provincial economy is based on micro enterprises with no access to Financial Services

  • Micro finance can provide profitable business opportunities to the bank
  • Provide impetus to economic activity at the gross root level through equitable distribution of resources

Mission Statement

To be the largest Micro Finance Institution in NWFP on sustainable basis.


  • Improved access of credit to low-income and disadvantaged segment of the society
  • Poverty alleviation through Micro Finance Services.
  • Contribute to the improvement of employment opportunities in the province.
  • Promote income generating activities with emphasis on smaller and diversified loans for women.

Outreach Mechanism

  • By targeting individual entrepreneurs and cluster based activities through field staff.
  • Delivery of financial services through RSPs and NGOs especially in rural areas.
  • Wholesaling of funds to NGOs and RSPs for on-lending.

Bank’s Past Microfinance

Sr #. Loan Type Cases Approved Amount Disbursed
01Micro Loans15,106784.172
02Group Loans1,390106.534
04Micro Domestic Consumer Loans (MDCL)4,668273.210
05Self Employment Scheme(SES)829129.115
06Motor Cycle Loans57323.867
07CNG KIT401.130
Total 22761 1328.028

  BoK’s Specific Initiatives

  • Tea development Program at Shinkiari (Mansehra)
  • Eco Friendly Tourism at Mahodund (Swat)
  • Off season vegetables at Mattaltan (Malakand)
  • CCMA Charsadda (Cluster Based Intervention)
  • Sardaryab Fishermen Cluster
  • Pilot Projects on Women Saving & Credit Associations (Swabi & D.I. Khan)
  • Promotion of Agriculture Tools and Machinery (Mardan & Takhtbhai)

Khud Kafalat Scheme


To overcome the massive unemployment resulting from the effect of Terrorism, Devastating Floods and Economic Recession and to facilitate and promote entrepreneurship in order to generate economic activities in the province.

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To Facilitate the Government of Khyber Pakhtunkhwa in its commitment to provide easy access to credit on soft terms in order to build a solid base for poverty eradication and employment generation in the province.

Target Group:

  • Unemployed youth
  • Small Traders
  • Female entrepreneurs
  • New entrants having skill but not having sufficient finances to start their own business.
  • Artisans
  • Skilled workers
  • Trainees from skill development institutes interested in starting their own businesses.
  • Low income entrepreneurs who are specially qualified / skilled and experienced or women trained in Art or Craft and other Vocational skills.
  • Entrepreneurs who are engaged in manufacturing, processing, preservation of food and services such as Handloom Weaving, Handicrafts, Garments etc in Villages and small towns.

Feasible Traders:

  • Mineral and mineral based activities
  • Gems
  • Dairy, livestock and poultry farming
  • Horticulture
  • Handicrafts
  • Fisheries
  • Tourism
  • Furniture and wood related activities
  • Agriculture related business
  • Light engineering or metal related businesses
  • Small shops
  • Traders
  • Service Providers like beauticians, tailors, electricians, shoemakers etc.

Salient Features of the Scheme:

Launching Date:                        7.11.2013

Loan Size: Rs.  50,000   to  Rs.  200,000
Mark-up Rate0%
Tenure3 Years
Grace Period3 Months
Recovery ModeMonthly Installment
Quota 68%


Special 2%

SecurityTwo Personal Guarantees

Eligibility Criteria:

I. Applicant Should Be

  • A Permanent Resident of Khyber Pakhtunkhwa
  • Having a Valid Computerized National Identity Card
  • Age limit: 18 to 50 years
  • Not an Employee of any Government or Semi-Government or Autonomous body
  • Not a regular student
  • Not availing loan from any other Bank / DFI or any other institution
  • Not a loan defaulter

II. Guarantor’s Eligibility

  • Members of chamber of commerce & trade
  • Office bearers of recognized trade associations
  • Reputable professionals like Doctors, Engineers,
  • Principal / Vice Principal/ Owners of a private education institution
  • Any Notable Person of the Village / Mohallah with verifiable income
  • Provincial Government regular employees


  • Two guarantors are required and at least one guarantor shall be a Provincial Government employee
  • Defaulter of any financial institution can not guarantee any loan
  • One person can guarantee only 2 loans

II. Required Documents

  • Prescribed Application Form (Duly Filled in)
  • Valid CNIC Copy of Applicant & Guarantors
  •  Passport Size Photos of Applicant & Guarantors (Females are exempted)
  • Certificate of training or proof of the skill
  • Salary Slip & letter of Verification  (where Guarantor is a Government Servant)
  • Proof of Income from guarantors

IV. Approval / Disbursement Process

  • Receipt of Application Forms at Field Office
  • Assessment / Verification by Field Staff
  • Evaluation and Decision at the BOK Head Office (Approvals / Declines / Deferrals)
  • Opening of Bank account
  • Documentation at Branch Level
  • Disbursement
  • Monitoring & Recovery

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