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Download SBP Banking Services Corporation - Pakistan Textile ...  REFINANCE-2.pdfSBP Banking Services Corporation Faisalabad. Prepared By, Muhammad Maqsood Sr. Officer SBP Export Finance Scheme

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  • Refinance Scheme Unit.SBP Banking Services CorporationFaisalabad.

    Prepared By, Muhammad Maqsood Sr. Officer

    SBP Export Finance Scheme

  • The scheme was launched in March 1973 known as Refinance Schemefor Non Traditional and Newly Emerging Exports with a view to provideadequate bank credit for exports of non traditional and newly emergingcommodities on attractive terms.

    This was 90 days (Pre-shipment) facility with a 90 days Rollover Option.

    May 1976 the scheme was renewed as Refinance Scheme for Exportsto include all exports of manufactured goods other than raw cotton, ricewool and hides and skins for concessionary finance.

    October, 1977 the scope of scheme was further enhanced to introduce anew feature of performance based finance under Part-II of the schemethat was re-named as Export Finance Scheme (EFS).

    Introduction & Transitional Overview

  • 1998, Refinance facility was also extended to Indirect Exporterssubject to fulfillment of requirements.

    The Export Finance Scheme has gone into major modifications inthe years 1985, 1998, and 2001.

    2001, as a part of liberalization of banking sector and to addressthe issue of excessive documentation, processing of Part-I caseswas entrusted to banks.

    July 2007, financing/ refinancing was introduced on a ratio as:

    Bank : SBP


    November 2008, 100% refinancing by SBP.

    February 2009, extension of 90 days was provided under Part-I.subject to showing performance 117% of borrowed amount.

    Introduction & Transitional Overview

  • SBP ACT-1956 Section 17(2a) and 17(4c) authorize SBP to carryon and transact the several kinds of business includingpurchase, sale & rediscount of bills of exchange and promissorynotes maturing within 180 days as well as advances or loans tocommercial banks.

    The extension of advances to commercial banks under thescheme is made out of the Export Credit Fund establishedunder section 17C(2a) of SBP ACT 1956.

    Section 17(6B) also authorizes SBP to provide refinance tocommercial banks and financial institutions for agricultural orindustrial purposes on other such terms and conditions as theCentral Board of SBP may decide from time to time.


    SBP Export Refinance SchemeLegal Framework

  • Scope & Objective of EFS

    Short term Financing Facility to Exporters

    Uplift of exports of Pakistan

    Concessionary finance to encourage/motivate exporters

    Diversification of Exports

    Value added & finished products

    Manufactured goods

    Expansion & spreading out new markets

    Growth of economy- Rise in GDP

    Inflow of FOREX-International trade

    Development Finance Support Department 6

    Objectives of EFS

  • Rationale of Negative List

    Raw Cotton

    Crude Vegetable Materials

    Hides & Skins

    All metals/ ores

    Jewelry exported under entrustment Scheme

    Works of Arts & Antique

    Wood in rough & squared

    Wool & Animal hair

    Stone, sand & gravels

    Petroleum Products

    All Grains including Grain Floor

    Cotton Yarn all types

    Crude Animal Materials

    Leather wet blue

    Fertilizer Crude

    Mutton and Beef other than frozen & preserved

    Fur Skins

    Bleach & Un-bleach cloth

    Live Animals

    Waste & Scrape of all kinds

    Crude vegetable materials

    Crude Minerals

    Development Finance Support Department 7

    Negative List

  • Salient Features of EFS

    Categorization of EFS:

    A. EFS- Part-I

    Transactions Oriented

    B. EFS Part-II

    Performance Oriented


  • Operational Mechanism

    EFS- Part-I ( Transactions oriented)

    1. Pre-Shipment

    2. Post Shipment

    Development Finance Support Department 9

    Operational Mechanism

  • Pre-shipment Process


    Exporter having received the Firm Export Order / Letter ofCredit approaches the commercial bank.

    Commercial bank, if satisfied with the documents,provides pre-shipment finance to the exporter tomanufacture the order.

    Bank then approaches SBP BSC for the Refinance.

    Development Finance Support Department 10

    Operational Mechanism

  • Pre-shipment


    Exporter after availing the finance has to:

    1. Make the shipment within 180 days of obtainingthe finance.

    2. Get the export proceeds realized within 210 days ofdate of shipment

    Development Finance Support Department 11

    Operational Mechanism

  • Post-Shipment - Process

    Post Shipment:

    Exporter having shipped the goods approachescommercial bank for short term finance against itsshipment to bridge the gap between his immediatefinancial needs and export proceeds realization.

    Commercial bank, if satisfied with the documents,provides Post-shipment finance to the exporter against theshipment already made.

    Bank then approaches SBP BSC for the Refinance.

    Development Finance Support Department 12

    Operational Mechanism

  • Post-shipment:

    Exporter has already shipped the goods

    Exporter has to get the proceeds realized within 210 days of date of shipment

    Development Finance Support Department 13

    Operational Mechanism

  • Processing at SBPBSC:

    Step I:- Bank will disburse financing to the eligibleexporter against in order requisite documents. Bank willapproach the concerned SBP BSC Office to obtainrefinance.

    Step II:- The bank will submit Form D and DP Note(executed by the exporter concerned) to SBP BSC(Bank) to claim refinance.

    Step III:- If documents are in order, SBP BSC willprovide refinance within 48 hours.

    Development Finance Support Department 14

    Operational Mechanism

  • Repayment of Finance:

    On Maturity of Loan.

    Earlier, if export proceeds are realized before the expiryof the tenor of the loan.

    Banks have to repay refinance within 3 working days ofthe negotiation / realization of export proceeds, failingwhich punitive action will be taken as per rules.

    If on maturity of the loan, borrower does not pay to thebank, bank will settle SBP BSC Bank refinance loan ondue date in any case.

    Development Finance Support Department 15

    Operational Mechanism

  • Operational Mechanism

    EFS Part-II:

    Performance oriented


  • Operational Mechanism

    Limit Allocation:

    A revolving finance limit equivalent to 50% of export proceeds realized during the previous year is fixed on annual basis.

    Maximum period of loan is 180 days

    Export performance is matched annually against total loan availed during the year on daily product basis


  • Operational Mechanism

    Procedure of Entitlement:

    The bank shall allow a limit to the exporter on the abovebasis and send all copies of Form EE1 in respect of eachcase to Foreign Exchange Operations Department (FEOD)of the respective office of SBP BSC for verification ofrealization of proceeds.

    After verifying EE-1 , the concerned FEOD shall return theoriginal and duplicate copies to the concerned bank andretain the third.

    Exporter may obtain finance limit from more than one bankto the extent of 50% of exports realized through eachbank.


  • Operational Mechanism

    Monitoring of Export Performance:

    Performance of the exporter shall be watched by the bankconcerned by obtaining Form EF1 from concernedexporter.

    Form EF1 is submitted in triplicate to FEOD forverification after close of financial year.

    After verification of these Forms by FEOD, the original andduplicate copies shall be returned to the bank concerned,the third copy retained by FEOD.

    The duplicate copy shall be submitted by the bank to therespective office of SBP BSC by 31st August.


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  • Nature of Irregularity Rate of Fine

    Non Shipment. Paisa 37 per day per Rs.1000/-

    Short/ Delayed Shipment. Paisa 28 per day per Rs.1000/-

    Late adjustment of funds Paisa 42 per day per Rs.1000/-

    Delayed submission of shipping documents by the exporters.

    Rs.2000/- for default and Rs.100/- for each day of default.

    Fine for wrong/ incorrect reporting/ entry Rs.100/- per such wrong/ incorrect reported entry.

    Fine for non submission of EPRC . Rs.20,000/-, 25% of which i.e., Rs.5000/- would be non refundable even on late submission of EPRC.

    Fine for irregular availment of pre-shipment /post-shipment export finance facility by the exporter.

    In all pre-shipment/post-shipment loans cases where it has been noticed that shipment(s) was madebefore/after (in case of post-shipment) disbursement of finance , the shipment has to be treated as in ordersubject to recovery of fine @ Rs.2000/- and Rs.100/-per day for the period for which the refinance loan remains outstanding on the part of bank or up to the date of factual position conveyed to concerned SBP BSC Office, whichever is earlier.

    Fines under Part-I of EFS

  • LTFF


  • Long Term Financing Facility (LTFF) For Plant Machinery

    The scheme was launched in December, 2007 for long termfinancing facility to promote export led industrial grow thecountry. The facility will provide necessary finance to exportersfor adoption of new technologies and modernizing plant andmachinery in line with the international competitive environment.

    Introduction & Transitional Overview

  • Salient Features of LTFF

    A. Scope: Exporters (including SMEs) can avail financingunder the facility throug


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