State Bank of Pakistan Credit Incentive Schemes

• Short Term Financing

  • Export Finance Scheme

• Long Term Financing

  • Long Term Financing-Export Oriented Projects.

  • Locally Manufactured Machinery.

State Bank Credit Incentive Schemes

A- Export Finance Scheme (EFS)

This is short-term working capital facility for 180 days to increase the exports. The scheme operates in two parts. Part-1 is the Transaction Based, while Part-II is Performance Based.

Objectives of the EFS 

• To increase exports

• To change composition of exports

Eligibility Criteria for EFS: Facilities under EFS are available for

• Value added commodities except those mentioned in the Negative List

• Direct Exporters (those who export directly)

• Indirect Exporters (who are input supplier to Direct  Exporters)

• Small, Medium and Emerging Exporters

• Commercial Exporters & Trading Companies

Coverage of the EFS

Mark-up Rate under EFS

• Mark up rate under EFS is fixed on monthly basis.

• Current Mark up rate is 7.5% plus Spread of Banks, which is 1%.

Pre-requisite Documents

• Application

• Duplicate Copy of EE-I Statement

• Demand Promissory Note from exporters (DP Note)

• Undertaking

• Direct Exporters are liable to submit the documents within 30 days from the date of shipment, while Indirect Exporters within 15 days of the supply of goods to the Direct Exporters.

Repayment by the Exporter & Bank

180 days from the date of Shipment

Earlier, if export proceeds are realized before the expiry of the 180 days period.

Banks have to repay refinance within three working days of the realization/expiry of loan, failing which their account will be debited by the concerned SBP, BSC Offices.  BACK

B- LTF-EOP Scheme

Scheme for Long Term Financing for the Export  Oriented Projects (LTF-EOP)”  would allow the eligible financial institutions to provide funding facilities to the export oriented units, who meet the financing criteria, on attractive terms and conditions for import of machinery, plant, equipments and accessories (not manufactured locally).

Objectives of the Scheme

• Preparation under the trade liberalized era

• To help sustained growth of exports

• To help SMEs to meet the challenges of WTO regime

• To help SMEs to enhance their production potential for exports

• Enhancement of existing manufacturing facilities

• Synchronization of trade policy incentives

Salient features of the Scheme

• Exporters for import of machinery, plant, equipments, etc for setting up new units

• Up-grade the existing units-BMR

• Meet the needs of the borrowers from the SME Sector

• All types of machinery is eligible, however, in case of spinning only those  sub sectors are eligible that add value

• Maximum period of financing is 7 ½ years

Facilities under the Scheme are not available :-

• For financing machinery already imported for ongoing projects

• For equipments/accessories which are not integral part of the machinery required by the borrower

• To commercial importers or trading houses

Interest Rate Incentive

Interest rate  is determined annually, however, the borrower is required to repay the loan at markup that was applicable at the time of disbursement of loan i.e. borrower will repay the loan at a fixed rate for the whole period of loan. 

Mark up Rates under LTF-EOP

Eligibility Criteria :

• Projects / units eligible for financing under the Scheme must have;

• at least 50% exports of their annual production direct or indirect

• Debt/Equity Ratio is 80:20 (maximum debt will be 80% of total borrowings)

• Borrower have no export overdue bills of more than 365 days

Scope of the Scheme

• Facilities under the Scheme are available all over the country.

• Facilities under the Scheme are also available to those exporters who are eligible to avail incentives of export development schemes announced by the Ministry of Commerce & EPB

Banks/DFIs Eligible to Grant Finances

 All banks/DFIs are eligible to grant finance under the Scheme subject to their approval as Participating Financial Institutions (PFIs) by SBP.

Repayment of Finance/Refinance

• Loan is repayable in half-yearly or quarterly installments. Scheme provides multiple options of repayments:

• Upto 2 years (without any graces period)

• Over 2-3 years (including grace period of 6 months)

• Over 3-5 years (including a grace period of 1 year)

• Over 5-7½ years (including a grace period of 1½  years)

• Upto 5 Years for acquisition of  brands &   franchises (without any graces period)  BACK

C- Locally Manufactured Machinery (LMM)

The scheme was introduced to induce the industrialists desirous to set up projects/industries in Pakistan based on locally manufactured machinery (LMM) creating effective demand for the machinery items manufactured/assembled in Pakistan. The scheme can play a pivotal role in the development of Engineering Sector in Pakistan.

Objectives of the Scheme

• To expand domestic market of the locally manufactured machinery items

• To meet the credit needs of the industrial concerns preferably in the SME sector.

Eligibility Criteria :

• Scheme for Locally Manufactured Machinery (LMM) includes

• Only those plants, machinery, equipment, transport equipment, cargo vessels ships, fixtures, fittings and accessories, which are to be used for industrial applications for processing in Pakistan.

• Machine having 20% cost of imported components-eligible for 100% financing

• Machine having more than 80% imported components-not qualify for financing

• Presently, 24 industries are eligible for financing under the scheme.

Financing

Financing is available to both manufacturers & purchasers. The repayment period, under the scheme has been kept flexible ranging: 

6 months to 2 years for manufacturers and 7 ½ years for purchasers of the locally manufactured machinery.

Mark-up Rate under LMM

Participating Financial Institutions (PFI) (Banks, DFIs, Investment Banks, Leasing Companies & Modaraba) are eligible to grant the finance, while the SBP will perform as a regulatory body.

            Rate of Finance:      7.5% p.a

            Rate of Refinance:   6.5% p.a

State Bank of Pakistan under SMED Circular No.15 dated  14^th July, 2006 announced that the existing scheme for financing Locally Manufactured Machinery (LMM) is being merged with scheme for Long Term Financing for the Export-Oriented Projects (LTF-EOP) to provide a level playing field to exporters for setting up and Balancing, Modernization and Replacement (BMR) of Export Oriented Projects/Units. The new proposed scheme titled as “Long Term Financing Scheme for Imported & Locally Manufactured Machinery” is being finalized and would replace the existing LTF-EOP and LMM Schemes.     BACK

 

Export Resources
Search Exporter Database at EPB Ministry of Economic Affairs and Statistics Export Statistics and Trends By Export Promotion Bureau	Trade Policy Search Latest Export News at Yahoo Foreign  Trade of Pakistan Export Development Export /Import Balance of Trade