NAGEEN GUL

REG. NO. MBAR191006

BUSINESS FINANCE
SUBMITTED TO: Ma’am RABIA HABIB
ASSIGNMENT NO. 2
Long term financing in Pakistan
LONG TERM FINANCING OPPURTUNITIES IN PAKISTAN:
1. GOVERNMENT:
PAKISTAN INVESTMENT BONDS:

Key Features of the Pakistan Investment Bonds (PIBs)

 Issuer: Government of Pakistan
 Issued in accordance with Public Debt Act 1944
 Denomination: Issued in multiples of PKR 100,000
 Tenors: 3, 5, 10 and 20 years
 Coupon payment: Fixed & Semi-annual
 PIBs are issued in a scrip less (without physical) form
 Auction schedule: Quarterly schedule published by SBP at the beginning of
each quarter
 Income Tax: Income Tax will be deducted as per existing law
 Zakat: No compulsory deduction of Zakat at source
 Custodian: Ultimate custodian is the State Bank of Pakistan (SBP), but banks
maintain these securities in the Investor Portfolio of Securities (IPS) Accounts on
behalf of their customers

Investment Procedure:
Investor Portfolio Securities (IPS) Account: The Investor Portfolio of Securities
(IPS) account is necessary for investing in PIBs. Primary Dealers/Scheduled Banks
hold PIBs in IPS accounts on behalf of their customers.
How to Open an IPS Account: All Primary Dealers (PDs) of Government
Securities, designated by State Bank of Pakistan for each financial year are
required to offer these accounts to their customers.
How to buy PIBs: After opening the IPS account, investor can instruct its bank to
buy the PIBs either from the primary market through “non-competitive bidding”
process in regular auctions conducted by the SBP or from the secondary market.
Profit Payment: The profit on investment in PIBs is paid in the form of Coupon
payments. The coupon payments are paid at a fixed rate of face value of PIBs on
semi-annual basis. The amount of profit will be credited to the account of investor
through its bank.

Redemption: PIBs are only redeemable at maturity. However, any investor can
sell PIBs in secondary market through its bank. If an investor holds the PIB till
maturity, the PKR value equivalent to face value of the PIB will be credited to the
account of the investor through its bank on the maturity of PIB.

2. BANKING SECTOR:

2.1. LONG TERM FINANCING OPPURTUNITIES PROVIDED BY

HBL:

A. Conventional Finance:
Conventional finance offers customized borrowing solutions to finance the cash
flow & transactional requirements of businesses, either to meet working capital
needs, finance their term needs for capex or trade financing for Imports & Exports.
With Conventional Finance, loans are tailored as per customer's needs offering a
financ’ facility structured around the business requirement of the customer.
Amount of Finance:

Aggregate Financing Limits up to Rs. 200M

Sector:

All Sectors of the Industry

Repayment Mode & Frequency:

Quarterly mark-up and installment repayments. Transactional financing according
to internal cash generation of business and or pre decided terms with customers.

Tenor of Loan:

Depending on the facility type

Collateral Requirements:

Secured against residential/commercial/industrial property.

Pricing:

Pricing varies customer to customer based on risk profile of customer

Fee & Charges

As per schedule of charges

B) Project Finance:
The bulk of HBL’s project finance practice revolves around the power sector. Prior
to the power policy of 2002, HBL actively pioneered Project Finance in Pakistan
through the funding of a gas-fired co-generation plant (94 Megawatts of power and
desalination of 3 million gallons per day). Subsequent to the 2002 power policy,
HBL continues to play a fervent role in the sector and is the only Investment Bank
that was Lead Advisor to all IPP transactions that achieved financial close. In the
fertilizer sector, HBL financed the largest local currency financing in Pakistan,
worth PKR 23 billion, as well as a green field venture in the telecom sector worth
PKR 12 billion.

C) Debt Capital Markets & Syndications

Depending on the requirements of its customers, HBL offers a variety of products,
including syndications, securitizations, privately placed and listed TFCs, term
finance facilities, commercial papers, etc. HBL played the lead role in a number of
significant debt transactions, including PKR 15.14 billion TFC issue (the largest
privately placed issue in Pakistan), the first bond offering for any microfinance
institution in all of Asia, credit enhancement for a rapidly growing company in the
consumer durables sector and numerous tier-2 capital transactions for commercial
banks.
2.2. LONG TERM FINANCING OPPURTUNITIES PROVIDED BY
UBL:
A. UBL KAROBAR LOAN:

UBL Karobar Loan is a solution for easy access of cash required to grow your
business. It is exclusively designed for small and medium enterprises keeping in
view their business expansion and growth plans. UBL Karobar Loan is available
against mortgage of your property including residential, commercial and industrial.
Salient Features
Financing facility available up to PKR 30Mn
Borrowing facility up to 75% of your property value
Immediate availability of financial solution Running finance facility and Term
Loan For latest products pricing, contact your nearest UBL branch
To facilitate SE customer our relationship managers will assist in formulating
financial statements Personalized relationship management Minimum age 21 years
and Maximum age 60 Minimum 3 years of respective business experience
Required documents
Valid CNIC
Borrower Basic Fact Sheet
Copy of property documents
Financial statements
Audit financials in case of limited companies
Six months bank statement
Customer request letter

B) UBL Smart Cash Loan

UBL Smart Cash Loan gives you an opportunity for expanding and growing your
business, to meet your business working capital requirements and/or financing of
business assets while maintaining and growing your investment / savings in
selected UBL Mutual Funds.
Salient Features
Financing Facility up to 85% of your investment
Immediate availability of financial solution
Competitive Mark-up rates
Number of credit facilities including running finance, Term Loan, LC & LG
Personalized relationship management

3. NON BANKING SECTOR:

Specialized Financial Institutions:
Besides commercial banks, the financial system of Pakistan consists of a number
of specialised financial institutions.

3.1. Pakistan Industrial Credit and Investment Corporation

(PICIC):
The Pakistan Industrial Credit and Investment Corporation (PICIC) was
established in October, 1957 to provide finance to the private industrial sector in
the form of long- and medium-term loans in local or foreign currencies, equity
participation, purchase of debentures or underwriting of public issue of shares and
debentures. It guarantees and counter-guarantees loans and obligations, arranges
participation of local and external finance from private and institutional investors,
helps facilitate creation, issue or conversion of capital in any form and acts as a
trustee in this regard.
BRIDGE FINANCE:
Under its underwriting arrangements, PICIC provides bridge finance for periods
between the establishment of companies and floatation of their shares for public
subscription. Bridge financing, which carries interest, may be replaced by the
system of “firm commitment” underwriting which is compatible with Shari‘ah.
DEBENTURES:
P1CIC issues debentures to raise local currency resources for its Rupee loans.
After the elimination of interest, PICIC may issue the proposed PTCs. The
debentures already issued by PICIC may also be replaced by PTCs, to the extent
possible, with the consent of the holders of such debentures, and the rest may be
allowed to run their course.
3.2. Industrial Development Bank of Pakistan (IDBP):
The Industrial Development Bank of Pakistan was established in August, 1961 to
meet the long- and medium-term credit needs, in foreign as well as local currency,
in the private industrial sector, particularly for the development of small- and
medium-sized new industrial units. The Bank provides medium- and long-term
loans for the acquisition of fixed assets and short-term loans for meeting the
working capital requirements. It also provides guarantees for loans raised by
industrial concerns from other sources and invests in equity and debentures of
industrial companies.
3.3. National Development Finance Corporation (NDFC):
The National Development Finance Corporation was established in 1973 to
provide financial and technical assistance for the establishment of new enterprises
and for balancing, modernization and expansion of existing enterprises in the
public sector. The functions and activities of the Corporation include:
(a) Provision of medium- and long-term loans in foreign and local currencies;
(b) Provision of loans for working capital requirements;
(c) Equity participation;
(d) Purchase of debentures;
(e) Underwriting;
(f) Issue of guarantee for local and foreign currency loans;
(g) Participation in loan syndication both in local and foreign currencies;
(h) Financing sale of locally fabricated machinery; and
(i) Mobilization of savings through various deposit schemes.
 3.4. Equity Participation Fund:

The Equity Participation Fund was created in 1970 by a special legislation to foster
and accelerate the growth of small- and medium-sized industrial enterprises in the
private sector in the less developed areas of the country. The Fund, which is
administered by the Industrial Development Bank of Pakistan, is empowered to
provide equity support in the form of direct purchase of shares and underwriting of
public issues of shares and offers bridge finance facilities for projects set up in less
developed areas. The resources of the Fund consist of paid-up capital of Rs. 50
million of which Rs. 20 million is held by the Federal Government and Rs. 10
million each by the State Bank of Pakistan, Provincial Governments and
institutional investors.