Karachi, December 13, 2024 – Banks in Pakistan are under significant pressure to meet Advance to Deposit Ratio (ADR) ratios and are now offering loans below market rates to address this challenge.
(more…)Tag: loan
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SBP cuts loan write-off history to 10 years
KARACHI: State Bank of Pakistan (SBP) has allowed to reduce the history of write-off/waived loans and advances for corporate borrowers from 15 years to 10 years.
A statement issued on Thursday, the central bank said it had decided to reduce the reflection period of written off/waived loans and advances for corporate borrowers in the Electronic Credit Information Bureau (eCIB) of SBP from 15 years to 10 years.
eCIB is a repository of information about the credit history of borrowers of the banking system and is largely used by banks/Financial Institutions to assess the creditworthiness of borrowers.
This decision follows a detailed assessment of international practices.
It has been a general impression that reflecting the negative history/ write-off for a longer period might deprive the borrowers of a fresh start and would exclude borrowers from access to finance for longer periods (following the write-offs/waivers) regardless of the borrowers’ current financial performance and other favorable information.
It may be noted that various business bodies and Chamber Members frequently also raised such concerns.
They were of the view that placing a one-time write-off/waiver in eCIB for 15 years is a long period particularly when a business has paid back or settled its transaction with the bank. It creates difficulties for businesses in availing fresh financing for a long time.
Decreasing the reflection period to 10 years will bring our system in line with the international practice and provide a conducive business environment to boost economic activities besides helping to improve the country ranking in the Ease of Doing Survey conducted by the World Bank periodically.
Credit Information Bureau/Credit registry (eCIB) is one of the supervisory tools used worldwide to assist the supervisors in off-site supervision and on-site examinations.
SBP established its Credit Registry i.e. eCIB in 1992 with the objective to complement its role of prudential supervision and assessment of the risk monitoring functions of its regulated FIs.
Since then, the eCIB of SBP has evolved from manual to modern electronic online credit reporting system fueled by improvements in system and technology.
The existing eCIB system is not only helping in the expansion of credit but also enabling FIs to move from the traditional subjective approach of granting credit to a more efficient lending process.
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SBP allows extension in foreign currency loan settlement
KARACHI: State Bank of Pakistan (SBP) has allowed extension in settlement of foreign currency loans to facilitate exporters and importers in wake of coronavirus pandemic.
In a statement issued on Thursday, the SBP said that continuing with its commitment to support the industry amid COVID-19 pandemic, the central bank further facilitated the exporters and importers by allowing extension up to 180 days in settlement of their export and import loans under FE-25 Scheme.
Banks can now allow extension up to 180 days to exporters in settlement of their FE-25 loans in case they are facing delay in realization of export proceeds due to COVID-19.
Moreover, banks can also allow settlement of FE-25 loans to exporters through substitute contract during the extended period of 180 days where the original export contract has been cancelled due to COVID-19.
Likewise, SBP has also allowed the bank to extend the maturity of FE-25 import loans by 180 days.
This facilitation has been provided to exporter and importers for their foreign currency loans maturing up to September 30, 2020.
State Bank reiterates its unflinching resolve to continue working with all stakeholders to provide all needed facilitation in these uncertain times in the larger interest of people of Pakistan.
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SBP allows relief package relaxations to refinance scheme borrowers
KARACHI: State Bank of Pakistan (SBP) on Friday allowed easy loans, as allowed under relief package, to borrowers of refinance schemes.
In a statement issued the central bank said that it had allowed similar relaxations, as provided under the relief package, on its concessional refinance schemes.
The SBP is continuously reviewing the challenges arising out of COVID-19 pandemic situation with particular reference to the financial sector and taking measures.
Expanding the scope of its recently announced relief package for households and businesses, SBP has taken another major step today.
Under various refinance schemes loans are provided with preferential terms and conditions to promote growth in priority sectors of the economy.
Now the relaxation allowed for deferment in repayment of principal amount for one year for corporate, consumer, agriculture, SMEs and microfinance sectors, will now be available on financing of banks/ DFIs under SBP’s refinance schemes as well.
With this deferment of principal, the complete repayment schedule/tenor of the loan will be extended by one year.
The borrowers will, however, continue servicing their mark up during the period of principal deferment. In case borrowers are not able to service mark-up payment, banks/DFIs may reschedule/restructure the loan in such a manner that tenor of the loan can go up to one year beyond the existing maximum tenor of the respective scheme.
Borrowers of SBP’s following refinance schemes and their Shariah alternatives would benefit from this relaxation:
Long Term Financing Facility (LTFF)
Financing Facility for Storage of Agricultural Produce (FFSAP)
Refinance Facility for Modernization of SMEs
Refinance and Credit Guarantee Scheme for Women Entrepreneurs
Refinance Scheme for Working Capital Financing of Small Enterprises and Low-End Medium Enterprises
Small Enterprise (SE) Financing and Credit Guarantee Scheme for Special Persons
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Korea extends $500 million concessional loan to Pakistan
ISLAMABAD: Pakistan and Korea signed a framework arrangement amounting to $500 million on Wednesday. The ceremony was witnessed by Dr. Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance, Revenue and Economic Affairs.
Secretary, Economic Affairs Division, Noor Ahmed and Ambassador of the Republic of Korea, Kwak Sung-Kyu, signed the Framework Arrangement on behalf of their respective governments.
Under the signed Framework Arrangement (2018-20), Republic of Korea will provide long term concessional financing up to $500 million for execution of various development projects in Health, Information Technology, Communication, Agriculture, and Energy etc.
Earlier, the Ambassador called on the Adviser and discussed matters pertaining to enhancement of bilateral cooperation between the two countries.
The Adviser informed the envoy that Pakistan attached significant importance to its ties with the Republic of Korea which had so many layers of cooperation with Pakistan in both public and private sectors.
The Adviser appreciated the role and cooperation extended by the Republic of Korea for development projects in Pakistan.
He said that the economic relations between the two countries would be further strengthened with the passage of time and Framework Arrangement will enable Pakistan to seek financing from Korean Exim Bank for development of various Infrastructure Projects in Pakistan.
The Ambassador of the Republic of Korea hoped that this Framework Arrangement would be instrumental in backing up the economic policies and initiatives being pursued by the new Pakistani government.
He said that the Arrangement would go a long way in further strengthening bilateral cooperation.
He also said that Korea would extend all possible cooperation for economic development of Pakistan, which would be greatly conducive to promoting bilateral relations in the years ahead.