SBP Export Refinance Scheme

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SBP Export Refinance Scheme

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Categorization of EFS:

A. EFS- Part-ITransactions Oriented

B. EFS Part-II Performance Oriented

Salient Features of EFS


Part-I ( Transactions oriented) The commercial banks provide concessionary

finance to the exporters at Pre-shipment and/or Post-shipment stage for export of eligible commodities against individual Firm Export Order/Contract or Irrevocable Letter of Credit.

The tenor of facility is up to 180 days with a roll over option for further 90 days.

The exporter has to show export proceeds equivalent to the loan amount as performance.

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Part-II ( Performance oriented) An amount equal to ½ of the proceeds realized

during the previous year, is allocated on revolving basis.

Performance of exporter is matched annually against total loan availed on daily product basis.

The exporters are under obligation to realize export proceeds equal to 2 times during the relevant financial year except in case of leather garments where the existing requirement of 2 times has been reduced to 1.5 times.

The tenor of facility is also up to 180 days with a roll over option for another 180 days showing at least 70% shipments of loan availed initially. 5

Development Finance Support Department

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Fixation of EFS rates

Fixation of EFS Rates:

Till 2001, Markup rate under EFS was fixed on monthly basis and was concessionary/subsidized.

After 2001, market oriented mechanism was introduced/ adopted and mark up rate was linked to 6 Months Treasury Bills (T-bills) average weighted rate.

Since July 2006, the rate was imbued with subsidy element.

Presently, rates have been re-linked with Monthly TBs.

Average rate of 6 Month’s T-bill + spread



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Repricing of loans

Repricing of Loans:

If the new rate is higher than the previous rate then the previous Lower rate will prevail/remain effective.

If the new rate is lower than the previous rate then loans will be re-priced at new Lower rate to pass on the benefit of lower rate to the exporters.


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Eligibility Criteria:

Under EFS all major value added commodities exported from Pakistan are eligible for financing except those mentioned in Negative List under the scheme. Therefore, any exporter who meets the lending criteria of a bank can avail financing for eligible commodities.

EFS Facility is also available to the input suppliers/manufacturers of the Direct Exporter, termed as Indirect Exporter (IDE) on the basis of Standardized Purchase Order (SPO) or the Inland Letter of Credit (ILC) to be established by the Direct Exporter against the particular Export Order/Contract/Letter of Credit. IDE will be eligible to avail finance from banks against ILC or SPO, to the extent of the amount mentioned therein.


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Operational Mechanism

Limit Allocation to Commercial Banks by SBP Borrowers evaluation by the Commercial bank Disbursement to the eligible borrower by the

bank Reimbursement to the bank by SBPBSC Funds provider – SBP Intermediary – Commercial Bank Risk Taker – Commercial Bank


Export Refinance Scheme- Operational Flow Chart

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Request for finance

Grant of finance

ExporterABC Bank

Request for Re-finance

Grant of Refinance within 48hrs. or

otherwise

Verification Team

On-site Verification of EFS cases

IH&SMEFD

SBP BSC

DFSDSBP BSC HOK

SBP BSC Office

Verification Reports

Bank-wise Consolidated Verification

Reports

Reported to the President of the Bank

Compilation of Verification

Report


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Sanction of Annual Limits

Sanction of Annual Limits under EFS

Revolving limits granted each year. Linked to Monetary policy of Central Bank

Grant of limits by SBP to commercial banks for providing finance to their clients (exporters):

Banks submit applications for allocation of limits each FY. Entitlement is determined as multiple of equity of

the bank. Bank’s composite rating is examined. Previous year’s utilization of funds EFS is

considered. Reset upon banks request or due to economic

conditions



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Stakeholders are: SBP; SBPBSC and Banks IH&SMEFD handles issues of EFS and grants limits. Limits allocation at various offices of SBP BSC Transfers of limits from one office to another Present criteria for limits – Quarterly review In order to avail revolving limits, banks are required

to submit the following documents:- Agreement with SBP on Form – A - Demand Promissory Note.- Region wise allocation request



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History of EFS rates:Year Rate of Refinance Spread Total

1973 4% 3% 7%1977 7% 3% 10%

1994 10% 3% 13%

2001* 11.5% 1.5% 13%

2003* 1.5% 1.5% 3%

July 2006 6.5% 1.0% 7.5%

Oct 2010 8% 1.0% 9%

Jan 2011 10% 1.0% 11.0%

10th Sep 2012 8.5% 1.0% 9.5%



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EFS- Part-I ( Transactions oriented)

1. Pre-Shipment2. Post Shipment



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Pre-shipment – Process

Pre-Shipment:

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

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

Bank then approaches SBP BSC for the Refinance.



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Pre-shipment

Pre-Shipment:

Exporter after availing the finance has to:1. Make the shipment within 180 days of

obtaining the finance.2. Get the export proceeds realized within 210

days of date of shipment



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Documents for Pre-shipment:

Nature of Facility D E I E

Pre-shipment 1. Firm Exporter Order/LC/ Contract

2. Application/undertaking on Form – B

3. D.P. Note

1. Inland LC/Standard Purchase Order (SPO)

2. Application/Undertaking on Form - C



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Post-Shipment - Process

Post Shipment:

Exporter having shipped the goods approaches commercial bank for short term finance against its shipment to bridge the gap between his immediate financial needs and export proceeds realization.

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

Bank then approaches SBP BSC for the Refinance.



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Post-shipment:

Exporter has already shipped the goods Exporter has to get the proceeds realized

within 210 days of date of shipment


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Thank You!