Tag: refinance scheme

KARACHI: State Bank of Pakistan (SBP) has facilitated exporters and banks by digitizing the process for obtaining refinance under Export Finance Scheme (EFS).

The process has been digitized for both conventional and Shariah compliant versions, the SBP said on Wednesday.

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Digitization of the refinance process is envisioned to effectively use technology for enhancing operational efficiency. Now EFS related cases and other relevant data will be submitted electronically to State Bank by banks through an online platform for expeditious regulatory decisions.

Initially, the digitized process of EFS cases will run in parallel with existing manual submission for a short period. Thereafter, the paper based submission of cases by banks will permanently give way to electronic submission of cases.

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This online platform will also enable banks to track the updated status of EFS related cases submitted to SBP/SBPBSC, on real time basis. Banks will be able to retrieve the system‐generated reports for updated status for onward sharing with their customers.

The implementation of digitization of EFS functions will enable SBP to delegate some of the operations to banks, such as sub-allocation of EFS limits by banks as per their own requirements. Under digitized mechanism, there will be no need of transferring an exporter’s limit from one SBP BSC office to another SBP BSC office. This will ensure swift processing of EFS cases and benefit the banks / exporters availing financing facility under EFS.

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The digitization of EFS functions is expected to conserve resources and bring efficiency by reducing turn-around time and replacing the paper based submissions of cases that are prone to logistic and storage issues. This initiative is a part of SBP’s Vision 2020, aiming to implement a modern framework for the retention and sharing of information and bring ease of doing business.

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KARACHI: The State Bank of Pakistan (SBP) has allocated an additional amount of Rs190 billion under refinancing schemes for exporters during fiscal year 2020/2021, a statement said on Wednesday.

In order to further facilitate the exporters, SBP enhanced the limit of refinancing provided to the banks under Exports Finance Scheme (EFS) by Rs100 billion.

Hence, banks will now have overall limits of Rs700 billion for the exporters for 2020/2021.

Moreover, to promote export-oriented investment, Rs90 billion have also been allocated under Long Term Financing Facility (LTFF) for the FY 21.

This amount is in addition to limit of Rs100 billion already allocated to banks/DFIs under Temporary Economic Relief Facility (TERF) – a concessionary refinance scheme for setting up of industrial units, the SBP said.

Export Finance Scheme and Long Term Financing Facility are two of the oldest schemes of SBP under which concessionary financing is provided to the exporters.

EFS is operational since 1973 to meet short-term financing needs of exporters, while LTFF has been available 2008. For both the schemes, their Shariah compliant versions are also available.

Since the emergence of Covid-19, SBP has taken several measures to counter its impact on the economy and safeguarding country’s exports has been a key priority. SBP has provided a number of relaxations under EFS and LTFF since March 2020 including:

Additional period of six months for making shipment against loans availed under EFS Part-I.

Additional period of six months for meeting required export performance against loans availed under EFS Part-II.

The export performance of this extended period will also be considered for calculating the entitlement limit for 2020/2021.

Reduction in showing export performance from 2 times to 1.5 times against financing availed during FY20 and FY21.

Relaxation in the eligibility criteria for availing finance under LTFF.

Allowing deferment of principal amount for one year and/or rescheduling/restructuring of loans under LTFF.

It is expected that with the above already provided relaxations, which were widely appreciated by business community; above enhancement of around Rs190 billion in limits will cater to exporters’ cheaper liquidity requirement. SBP is closely monitoring the situation and is ready to take any further actions required to support the export sector.

KARACHI: The State Bank of Pakistan (SBP) on Wednesday further reduced interest rate for loan obtained for wages and salaries under business incentive scheme.

SBP has enhanced the incentive to business which are active tax payers by reducing the mark up rate for them to 3 percent that was set as 4 percent earlier.

Now the SBP will provide refinance to banks at zero percent. This also increases the gap between the rates charged to active tax payer and the non-tax payers businesses, as the latter can be charged an end user markup rate of up to 5 percent, SBP said.

On April 10, 2020 the State Bank of Pakistan announced an incentive scheme— entitled Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns—that enables the provision of concessional credit for payroll finance to businesses that commit to not lay off workers for the next three months.

SBP has introduced further incentives under this scheme to support employment and avoid layoffs in the country.

These additional incentives include relaxations in collateral requirements, further reduction in end-user rate, reimbursement of wages, special accounts for employees to receive wages, borrowing from banks other than maintaining payrolls, simplification of application form for SMEs and bank’s exposure limits.

These additional incentives are effective as of today.

The central bank said that based on feedback from stakeholders, SMEs including vendors and distributors were particularly facing the problem of providing security/collateral.

To address this issue, SBP has now allowed banks for providing financing against corporate guarantees of companies in value / supply chain relationship with the borrowers. Moreover, banks have also been encouraged to provide loans without any collateral i.e. taking clean exposure of up to Rs 5 million.

To facilitate employees for receiving wages under the scheme directly, banks have been allowed to open their accounts on the information and documents provided by the employers along with an undertaking stating that these persons are bonafide employees/workers.

Banks will ensure verification of the employees using NADRA Verisys before activation of such accounts. These accounts, however, could be used solely for salary disbursement and withdrawal purposes only.

Businesses have also been given flexibility to avail loan under SBPs refinance scheme for wages from any bank and they will not be limited to avail loans from the bank that manages their payroll. Further, businesses will also be able to get reimbursement of salaries pertaining to the month of April 2020 that have been disbursed through own sources, provided they have applied for financing under the scheme before disbursement and the same is subsequently approved by the banks. SMEs can apply for the financing on a simplified loan application form prescribed by SBP for this scheme.

To facilitate the banks further for lending under the scheme, Banks’ exposure under the scheme has been exempted from the per-party or the per-group exposure limits. It will enable them to lend to borrowers that have exhausted their exposure limits.

All these benefits will also be available to businesses availing financing under the scheme from Islamic Banking Institutions.

KARACHI: State Bank of Pakistan (SBP) on Thursday launched refinance and credit guarantee scheme for women entrepreneurs in order to support and revive economic activities in the country.

The SBP said that the financing would be available to women entrepreneurs across the country for a period of up to 5 years, including maximum grace period of up to six months.

The maximum financing limit under the scheme will be Rs 1.5 million. The financing under the scheme should be provided for setting up of new business enterprises or for expansion of existing ones.

The SBP said that financing under the scheme should be provided to women borrowers preferably under the personal guarantee of the borrower.

The central bank said that as per the government’s policy to support and revive economic activities in the country and SBP’s measures for improving access to finance for the women entrepreneurs, a refinance cum credit guarantee scheme is being launched for the women borrowers across the country.

Under the scheme, banks and DFIs will be required to provide financing facilities to women entrepreneurs to meet credit needs of their businesses.

Under the scheme, refinancing will be provided by SBP at zero percent to participating financial institutions for onward lending to women entrepreneurs across the country at a mark-up rate of up to 5 percent per annum.

Such loans will also be eligible for 60 percent risk coverage under SBP’s Credit Guarantee Scheme for Small and Rural Enterprises.

The SBP said that it would allocate limits to PFIs under the scheme on receipt of request from them. The limits will be reviewed on yearly basis.

At least 20 percent of the limit should be allocated for lending to women entrepreneurs in Balochistan.

Applications for sanction of limits shall be sent by the interested banks/DFIs to the Director, Infrastructure, Housing & SME Finance Department.

The SBP said that repayment of loans by borrowers shall be made in equal quarterly installments after grace period (if any). The refinance granted by SBP BSC offices to the PFIs shall be recovered, on the due dates as reported in the original repayment schedule, from the accounts of the PFIs maintained with the respective office of the SBP BSC.

If a borrower repays the loan amount or its installment, in part or in full, before the due date(s), the PFIs shall be under obligation to repay the amount(s) so received within 15 days to the concerned office of SBP BSC failing which, fine for late adjustment of loan will be recovered from the concerned bank/DFI, at the rate of Paisa 60 per day per Rs 1,000 or part thereof or prospectively at such rate as may be announced by the State Bank from time to time.

In case a borrower fails to repay the amount of installment as per the original repayment schedule, the PFIs will be entitled to charge normal rate of mark up on such overdue principal amount besides taking other actions to recover the same as are incidental to such defaults.

The SBP will continue to recover the principal amount on the due dates as per the repayment schedule.

In no case, the liability of banks/DFIs to pay/repay to SBP BSC the principal amount of refinance as per the repayment schedule or mark-up or any other charges or penalty thereon shall be dependent upon the recovery from the borrower nor shall such liability be affected by any default on the part of the borrower.