SBP has introduced a TERF scheme to provide concessionary refinance for setting up of new industrial units which may be obtained through banks/DFIs. A few of the salient features of the TERF include, inter alia, (i) long term finance facility for purchase of new imported and locally manufactured plant & machinery for setting of new projects; (ii) maximum limit of up to PKR 5 billion per project; (iii) available for a period of up to 10 years including grace period up to 2 years and at an End User Rate of maximum 7% per annum (SBP’s rate of refinance will be 3%); (iv) repayment to be on quarterly / half-yearly basis; and (v) letters of credit and irrevocable letters of credit established between March 17, 2020 and March 31, 2021 will be eligible for the TERF.
In order to dampen the adverse effects of COVID-19 and to facilitate the banking sectors to extend additional loans to businesses of Pakistan, SBP has also reduced the Capital Conservation Buffer (CCB) for the time being, from its existing level of 2.50% to 1.50%, till further instructions and enhanced existing regulatory retail portfolio limit of Rs. 125 million to Rs. 180 million.
With regard to availing export financing during the period January 1, 2020, to September 30, 2020, the requirement to have exports worth 50% of total sales, or USD5 million of exports to avail credit under Long Term Financing Facility (LTFF) has been reduced to 40 percent or USD 4 million for all borrowings made under LTTF. Exporters have also been allowed an extension of six (6) months in terms of the Export Finance Scheme to meet the required export performance. Exporters whose date of shipment fell within the period January, 2020 to June 30, 2020 will not be liable to pay penalties due to being unable to ship their goods during the said period and in cases where penalty has already been paid, the penalty would be refunded. The time- period for realization of exports proceeds may be increased from the existing requirement of 180 days to 270 days if an exporter submits a satisfactory explanation along with supporting evidence showing delay in realization of export proceeds was due to Covid-19. With regard to importers, the time period for import of goods into Pakistan against advance payment has been increased from the existing requirement of 120 days to 210 days, provided that the importer submits satisfactory explanation along with supporting evidence showing delay in the import of goods was due to Covid-19. The restriction of delivering shipping documents directly to foreign buyers if the export consignment was of value up to USD 100,000 has been removed, provided that the exporter’s export over-dues are less than 1% and the exporter has exports of at least USD 5 million during the last 3 years. Further to facilitate manufacturing and industrial concerns and commercial importers, the existing limit on advance payment of USD 10,000 per invoice has been increased to USD 25,000 for import of raw material, spare parts, and machinery.