RIZWAN BHATTI
KARACHI: The State Bank of Pakistan (SBP) has announced to extend the refinance limits sanctioned by banks to individual exporters under Export Finance Scheme (EFS) for seven months i.e. up to Jan 31, 2021.
Export refinance limits sanctioned in favour of banks for the year 2019-20 are due to expire on June 30 this year. Further, the entitlement for the exporters to borrow under Export Finance Scheme (EFS) /Islamic Export Refinance Scheme (IERS) Part-II is determined for each year on the basis of export performance, which is prepared by bank/exporter and verified by the Foreign Exchange Operations Department (FEOD) of SBP.
In order to ensure that the financing facilities are available to exporters till finalisation of their new limits under Part-II of Scheme, it has been decided that limits sanctioned by banks to individual exporters under EFS/IERS Part-II for FY 2019-20 will continue till finalisation of new limits of FY 2020-21 i.e. up to Jan 31, 2021.
However, according to SBP, exporters who do not want to avail this relaxation, are required to intimate through their banks to concerned SBP BSC office till June 30. These exporters will be required to submit statements for FY 2019-20 duly completed in all aspects to concerned FEOD of SBP BSC Office through their banks well in time to get verify the statements.
Once verified from concerned FEOD, statements should be submitted to concern SBP BSC Office within deadline i.e. Aug 31 as usual. Current limit of FY 2019-20 of such exporters will continue till August 31 pending preparation/verification of statements.
The facility under EFS Part-II is self-regulating, the exporters will continue to foresee their export earnings during FY 2019-20 including additional period, if availed, work out their own estimate as to the quantum of their entitlement for FY 2020-21.
The exporters should accordingly adjust their existing borrowings on or before end, June 2020 to avoid utilization of excess financing under EFS during FY 2020-21 and charging of prescribed penalty in this regard.
SBP has said that requests from banks for limits under EFS/IERS for the year 2020-21 should be submitted to this department separately up to June 30. Banks should ensure submission of their requests for limits within due time. Further, the existing limits of Banks under EFS/IERS will continue till fresh limits for FY 2020-21 are notified.
Banks are, therefore, advised to clearly intimate these advises to their borrowers availing facilities under Part-II of the Scheme for compliance.
In addition, SBP has also decided to grant extension of refinance limits under the Long Term Financing Facility and Islamic Long Term Financing Facility (LTFF/ILTFF).
LTFF limit sanctioned in favor of banks/DFIs for the year 2019-20 are due to expire on 30-06-2020. In order to ensure that financing facilities are available to borrowers till finalization of new limits under LTFF/ILTFF for the financial year 2020-21, it has been decided to continue the existing limit till fresh limits for FY 2020-21 are notified.
Further, banks have been advised to furnish the limit requirements for FY 2020-21 under LTFF/ILTFF and limit request should be duly supported by borrower-wise details of cases being sanctioned, application(s) in process / details of LCs established and their expected date(s) of retirement. Banks are required to update the SBP, latest by June 30, 2020 to enable us to finalize limits under LTFF/ILTFF for FY 2020-21.
