Export Finance Mark-Up Rate Facility
Thursday, September 3, 2009
In pursuance of entry 7 of item 29A of Schedule II to the Rules of the Business, 1973, the Federal Government, is pleased to make the following Order that shall come into force from September 01, 2009.
a) Effective 1st September 2009 the Federal Government shall provide mark-up rate support of 2.5% to the exporters of Textile Industry on outstanding balances of principal amount of loans availed by the industry from commercial banks for export of eligible commodities under State Bank’s Export Finance Scheme (EFS).
b) The facility shall be administered by the commercial banks or DFIs. They will make the payment to the extent of mark-up rate support on the outstanding balance of EFS loans availed by the borrower of textiles sector and claim reimbursement from SBP.
c) It shall be paid by the commercial banks on six month basis in March and September each year subject to the release of necessary budgetary allocation by the Federal Government for relevant fiscal year.
d) The State Bank of Pakistan (SBP) shall reimburse the amount of mark-up rate support to commercial banks by debit to the appropriate Federal Government account to be intimated by Finance Division.
e) The units eligible for the facility shall furnish on line information to the Ministry of Textile Industry in the manner specified in Annexure I to this Order. Hard copy of the same will be submitted to the Ministry of Textile Industry after verification by the textiles associations concerned.
f) The units so registered will be provided with Special Identification Numbers to be used in all future communications will be eligible for the facility.
g) The registered units shall furnish data and any information related to the unit’s operations, domestic sales, accounts and exports as and when required by the Ministry of Textile Industry.
a) Effective 1st September 2009 the Federal Government shall provide mark-up rate support of 2.5% to the exporters of Textile Industry on outstanding balances of principal amount of loans availed by the industry from commercial banks for export of eligible commodities under State Bank’s Export Finance Scheme (EFS).
b) The facility shall be administered by the commercial banks or DFIs. They will make the payment to the extent of mark-up rate support on the outstanding balance of EFS loans availed by the borrower of textiles sector and claim reimbursement from SBP.
c) It shall be paid by the commercial banks on six month basis in March and September each year subject to the release of necessary budgetary allocation by the Federal Government for relevant fiscal year.
d) The State Bank of Pakistan (SBP) shall reimburse the amount of mark-up rate support to commercial banks by debit to the appropriate Federal Government account to be intimated by Finance Division.
e) The units eligible for the facility shall furnish on line information to the Ministry of Textile Industry in the manner specified in Annexure I to this Order. Hard copy of the same will be submitted to the Ministry of Textile Industry after verification by the textiles associations concerned.
f) The units so registered will be provided with Special Identification Numbers to be used in all future communications will be eligible for the facility.
g) The registered units shall furnish data and any information related to the unit’s operations, domestic sales, accounts and exports as and when required by the Ministry of Textile Industry.
Labels: Export Finance Scheme, LTFF, SBP, Textile
posted @ 1:14 PM,
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Mark-up Rate Support for Textile Sector
In pursuance of entry 7 of item 29A of Schedule II to the Rules of the Business, 1973, the Federal Government is pleased to make the following Order that shall come into force from September 01, 2009.
- Effective 1st September 2009 the Federal Government shall provide Mark-up Rate support on all outstanding running balances of principal amount of floating rate long terms loans availed by the textiles industry from commercial banks/Development Finance Institutions (DFIs), disbursed up to August 31, 2009, for financing import/purchase of textile machinery for which funds under State Bank’s Long Term Financing Facility (LTFF) have not been availed.
- The support will be admissible to the extent of 5% or the difference in mark- up rate between floating rate loan and LTFF rate, whichever is lower.
- The facility shall be administered by the commercial banks or DFIs. They will make the payment to the extent of mark-up rate support on the outstanding balance of loans availed by the borrower of textiles sector and claim reimbursement from SBP.
- It shall be paid by the commercial banks/DFIs on six month basis in March and September each year subject to release of necessary budgetary allocation by the Federal Government for relevant fiscal year.
- The State Bank of Pakistan (SBP) shall reimburse the amount due to commercial banks/DFIs by debit to the appropriate Federal Government account to be intimated by Finance Division.
- The units eligible for the facility shall furnish on line information to the Ministry of Textile Industry in the manner specified in Annexure I to this Order. Hard copy of the same will be submitted to the Ministry of Textile Industry after verification from the associations concerned.
- The units so registered will be provided with Special Identification Numbers to be used in all future communications will be eligible for the facility.
- The registered units shall furnish data and any information related to the unit’s operations, domestic sales, accounts and exports as and where required by the Ministry of Textile Industry.
posted @ 1:04 PM,
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LTFF Scheme For Usance LCs of Plant and Machinery
Saturday, June 27, 2009
In order to further facilitate the export oriented industries following amendments have been made in LTFF Scheme with immediate effect:-
- LCs (sight and usance) established before the announcement of the LTFF Scheme and retired after June 30, 2007 shall also be eligible for financing under the Scheme. However, LCs which have been retired through own sources of the sponsors of the export oriented industries, shall not be eligible under the Scheme.
- Financing for plant, machinery & equipment to be used by the export oriented projects for regeneration of textile waste into usable fiber for producing value added exportable products shall also be eligible under the subject Scheme.
- Refinancing shall be allowed to the extent of 50% of financing provided by banks/DFIs to the eligible borrowers availing facilities under para i & ii, while the remaining 50% will be financed by the banks/DFIs from their own sources as per the terms & conditions of financing banks/DFIs agreed with the borrowers.
Source: State Bank of Pakistan
posted @ 9:34 AM,
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LTFF For Generators and Captive Power Plant and Machinery
Wednesday, June 10, 2009
State Bank of Pakistan (SBP) has been decided that financing facilities under LTFF Scheme shall also be available to export oriented units/projects which presently are not eligible under LTFF Scheme for import of generators/captive power plants (including other allied machinery items used to generate electricity) on following terms & conditions;
- The capacity of generator/captive power plant shall not be in excess of their in-house energy requirements for the manufacturing of their products.
- In case of excess generation capacity, only the proportionate financing up to the manufacturing requirements of the unit/project will be eligible.
- Refinancing shall be allowed to the extent of 50% of financing provided by banks/DFIs for import of generators/captive power plants.
- Remaining 50% shall be financed by the banks/DFIs from their own sources as per the terms & conditions of financing banks/DFIs agreed with the borrowers concerned.
- L/Cs established since January 1, 2008 but retired/to be retired during the period from January 1, 2009 to December 31, 2009 shall be eligible for refinancing under the Scheme.
- Minimum exports of the unit/project should be at least 50% of its annual sales.
posted @ 10:08 AM,
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Revision in Long Term Financing Facility - LTFF
Wednesday, April 22, 2009
In order to facilitate the export oriented industries to overcome the prevailing crises and to remain competitive in the world market, State Bank has issued a SMEFD circular # 09 of 2009 dated 21-04-2009 to broaden the scop of Long Term Financing Facility (LTFF Scheme) circulated vide MFD Circular No. 07 dated December 31, 2007 and other instructions issued from time to time in the matter.
Main features are as follows;
- Its an one time opportunity to the exporters (excluding Textile & Garments) to refinance their outstanding long term loans.
- Long term loans eligible for refinance under the LTFF Scheme must be disbursed during the period from 01-01-2005 to 31-03-2009 to the exporters of eligible Sectors/Sub-Sectors mentioned in Schedule 1 of Scheme excluding Textile & Garments.
- No loan disbursed prior to the 01-01-2005 shall be refinanced under these arrangements.
- Exporters of Textile & Garments Sector will not be eligible for refinance under these arrangements. They will, however, continue to be entitled for fresh financing under LTFF Scheme.
- Refinance to banks/DFIs shall be provided only to the extent of 50% of outstanding principal amount at the time of grant of refinance. Remaining 50% shall continue to be financed by the banks/DFIs from their own sources as per original terms & conditions of respective lending institutions.
- Refinance under the arrangements shall be provided at the markup rate prevailing at the time of availment of refinance from the offices of SBP-BSC under LTFF Scheme.
- Refinance shall be provided on the basis of certification by bank’s/DFI’s Internal Audit with regard to outstanding principal.
- No refinance shall be allowed to non-performing loans (NPLs) classified under SBP Prudential Regulations.
- The banks/DFIs shall prepare the repayment schedule for refinanced portion (principal amount only) in line with the repayment schedule already agreed at the time of sanction / disbursement of the original loan.
- They may, however, amend the repayment schedule in a way that the borrowers can make repayments in equal quarterly or half yearly installments as mentioned in LTFF Scheme, however, total tenor of loan shall remain the same.
- A report from PBA’s approved surveyors (acceptable to bank/DFI) is required with regard to confirmation of machinery strictly with the criteria as laid down in LTFF Scheme.
- In case of consortium arrangements, refinance shall be allowed to financing banks/DFIs individually on submission of requisite documents along-with a certificate (in original) from the lead bank/DFI regarding their share in the consortium.
- The refinance obtained shall be checked by Banking Inspection Department (BID) during inspection of the banks/DFIs to ensure that this has been allowed as per laid down criteria.
- Refinance facility under above arrangements shall be a one-time opportunity effective from the date of issuance of this circular and will remain valid only up to 30th June 2009.
posted @ 1:52 PM,
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Long Term Financing Facility (LTFF) for Second Hand Machinery
Thursday, March 12, 2009
State Bank of Pakistan has further ameneded LTFF Scheme vide SMEFD Circular Letter No. 03 of 2009. Salient features are
Second hand plant & machinery to be used in the eligible sectors / sub-sectors of LTFF Scheme shall also be eligible for financing under the Scheme subject to following terms & conditions;
- Only imported second hand machinery not more than three years old will qualify for financing under the Scheme.
- Second hand machinery purchased from local suppliers will not qualify under the Scheme.
- Further, fixed term loans extended by banks/DFIs against second hand imported machinery prior to the issuance of this circular will not be eligible for refinance.
- The useful life of such machinery should be more than the period of loan itself.
- The borrowers concerned should submit a report from PBA’s approved surveyors (acceptable to bank/DFI concerned) with regard to confirmation that machinery is in order and its useful life is more than the period of loan itself.
- Banks / DFIs can avail refinance for a maximum period of three years, to the extent of value of such machinery determined by the approved surveyor; or original cost less accumulated depreciation @ 10% p.a., which-ever is lower.
- LCs established from the date of this circular to December 31, 2009 shall be eligible for refinancing from SBP.
To see the circular click here!
posted @ 10:08 AM,
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Exporters get one-year grace for loan payment
Friday, January 23, 2009
Exporters have been demanding extension of payment, saying a slowdown in business activities and a liquidity crunch had put them in a difficult situation. The State Bank of Pakistan (SBP) announced on Thursday a Rs.12.000 billion plan to help borrowers of the export financing scheme, deferring payment of their loans for one year.Salient features of the plan are as follows;
- Banks and development finance institutions (DFIs) to provide grace period to borrowers who have availed financing under the Long Term Financing for Export Oriented Projects (LTF-EOP), including Debt Swap Facility under LTF-EOP scheme and Long Term Financing Facility (LTFF) scheme.
- This is a one-time facility effective from the date of issuance of the circular and will remain valid only up to March 31. Any request received after March 31 will not be considered by banks or DFIs,
- Banks and DFIs may provide deferment of one year in repayment of the principal outstanding under the above schemes as of Dec 31, 2008.
- Under this facility repayment dates for all installments of principal amounts falling due between Jan 1 and Dec 31, 2009, may be re-fixed after a passage of one year from the due date. “For this purpose, banks or DFIs will carry out their due diligence of the individual borrowers on case-to-case basis.”
- No benefit under the circular should be given to the borrowers having non-performing loans, classified under SBP prudential regulations.
- In case a loan has already been rescheduled by a bank or DFI as per its policy or in case a borrower has defaulted on loans, such cases would not be eligible for the benefit under these instructions.
- The borrowers, who have already repaid LTF-EOP/LTFF loans, will not be eligible for reimbursement.
- Similarly, in case a loan is not payable during 2009 as per its original repayment schedule, it will not qualify for the benefit under these arrangements.
- Only loans outstanding as of Dec 31, 2008, will qualify for the benefit of grace period. As such, the loans disbursed on or after Jan 1, 2009, will not qualify for the said benefit.
- The banks and DFIs will keep on record the basis for grant of said benefit to the borrowers concerned, which will be checked by the Banking Inspection Department during inspection of banks and DFIs to ensure that this has been allowed as per laid-down criteria.
- Banks and DFIs will take into account the track record, conduct of account, underlying collateral, financial condition and future outlook, volume of exports and overall risk profile of the borrowers in evaluating their requests.
Ref: Business Recorder dated 22-01-09
Labels: Economy and Business, LTFF
posted @ 11:43 AM,
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