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SBP invites suggestions on new Export Finance Scheme

KARACHI (December 20 2005): The State Bank of Pakistan has invited suggestions and recommendations from all the stakeholders on the new Export Finance Scheme (EFS) 2005 in order to further update the scheme.

The recommendations and suggestions have been invited by the Small & Medium Enterprise Department, State Bank of Pakistan (SBP). The SBP's EFS in operation since 1973 has been a major source of banks' credit to the exporters. Over the years it has witnessed various modifications to simplify its procedures for the exporters and the banks.

With the same objective the scheme has been revised to further reduce the documentary requirements under EFS as also to realise the procedure for availing financing facility by the exporters of Locally Manufactured Machinery (LMM) and such machinery and goods supplied (a) locally against international tenders, and (b) to international agencies based in Pakistan for undertaking their relief activities in Pakistan or elsewhere in the region, provided the payments are received in foreign currency.

THE NEW SCHEME, ACCORDING TO THE SBP SHALL OPERATE IN THREE PARTS:

PART – A: Performance based facility for trade finance of exports – the distinction between part – I and part – II of the existing EFS shall cease to exist. The facility shall now be offered under part – A of the new scheme, on pattern similar to part – II of the existing scheme.

The facility shall continue to be available for 180 days to existing, New and Emerging Exporters (NEE) based on the entitlement calculated in accordance with their performance as prescribed under the scheme and the limit sanctioned by the banks to the NEE.

The operational details of the Islamic Export Refinance Scheme (IERS) shall also be changed in line with the modifications in respect of part – A of the new EFS, ie the distinction of part – I & part – II shall cease to exist for IERS also. Similarly, the documentation requirements shall also be modified accordingly.

PART – B: Offers transaction-based facilities for (i) Indirect Exporters (IDE), and for (ii) local supplies against international contracts, etc. The facility shall be available for 120 days for IDE, where for the local supplies the facility shall be available for a maximum of three years.

PART – C: Transaction-based facilities for the term finance of exports in respect of LMM items as covered under the definition of LMM under the scheme.

The mark-up charged under the scheme will be linked to weighted-average yields of T-bills and PIBs as specified in the scheme.

The items mentioned in the negative list of the existing EFS (along with any amendments made from time to time) shall continue to be ineligible for financing under the scheme.

Advance payments shall continue to remain ineligible for finance under all parts of the scheme, except where otherwise permitted.

For availing finance facility under the scheme, exporters are required to submit an undertaking that the export proceeds realised shall be routed through the disbursing bank (bank from which EFS was availed).

In the event that export proceeds are realised through any other bank the exporter shall obtain and submit NOC from the disbursing bank, for the same, at the time of sending documents from a bank other than the disbursing bank.

The scheme operates on reimbursement basis and the banks are not allowed to charge a rate higher than that prescribed by the State Bank on their financing under the scheme.

The EFS in respect of consultancy services and export of gold jewellery announced on October 30, 2001 and April 7, 2003 shall continue to remain intact as at present.

Similarly, instructions regarding financing facilities for goods exported from the Export Processing Zones (EPZs) and participation in international exhibitions/fairs as referred to in a circulars issued on August 4, 1982 and September 5, 1983 read with circular issued on October 10, 1985 shall continue to remain intact as at present.

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