Published On:Tuesday, 19 April 2016
Posted by Chaudhry

SBP Offers Easy Financing Scheme for Exporting Companies

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Companies having $5 million annual exports of goods and services or at least 50% of their sales constituting exports (whichever is lower) could expand their businesses under the central bank’s Long Term Financing Facility (LTFF) Scheme which offers financing at yearly rates of 6% mainly to purchase equipment and machinery.
This rate is offered under an exclusive scheme to give impetus to local businesses whereby businessmen could enhance their operations against the financing rates which presently stands at 42-year old level in the history of the country.
The scheme is different from various loan arrangements from commercial banks under which borrowers avail loans at more than 6 percent for limited period. Contrary, borrowers avail this scheme to build their infrastructure or business channels through purchase of required equipment and machinery.
Maximum borrowing limit for a single export oriented unit is Rs 1.5 billion under LTFF. Further, in case of larger financing requirements, i.e. over Rs 300 million, Banks are suggested to provide finance under consortium arrangements to diversify risk.
The maximum period for which the financing under the scheme can be availed shall not be more than 10 years including a maximum grace period of 2 years. Where financing is provided for a period of up to 5 years, the grace period shall not be more than one year.
Banks may not disburse the loan amount directly to the borrower; instead payments shall be made to the manufacturers / suppliers of plant and machinery through retirement of inland LCs, as per payment/delivery schedule agreed to between the manufacturer/supplier and the purchaser/importer
The scheme of LTFF can be availed from 17 commercial banks and 5 DFIs listed here.
IT and IT Enabled Service providers, local or foreigners could utilize this financing facility for export oriented projects. Other sectors will also be allowed to avail this scheme including Textile & Garments (viz. Spinning & Ginning, Fabrics, Garments, Made up, Towels & Art silk & synthetic textiles); Rice Processing; Leather & Leather products; Sports goods; Carpets & Wools; Surgical Instruments; Fisheries; Poultry & Meat; Fruits/Vegetable & Processing, Cereals; Marble & Granite; Gems & Jewellery; Engineering goods; Ethanol; Furniture and Pharmaceutical; Regeneration of Textile Waste; Glass; Dairy; & Soda Ash.
Under the facility, fine for any irregularity shall be imposed on the borrowers or banks as the case may be, depending upon the nature of irregularity.
In case the projections made by the borrowers in respect of export sales are not met with a confidence interval of 10%, the State Bank would consider imposing a fine on the borrower at a certain rate provided the borrowers fail to provide justification for the same.​

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