Credit Schemes of State

Bank of Pakistan (SBP)

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 Credit Schemes
 The Credit Schemes offered by SBP are as
follows:
 Export Refinance Scheme (ER);

 Long Term Financing of Export Oriented

Projects (LTF-EOP); and,
 Locally Manufactured Machinery (LMM)
Scheme.

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 Export Refinance Scheme (ERS)
 Objective of the Scheme is to encourage export
of value-added products (by use of Negative List)
by provision of concessionary financing facility
 Scheme is operated in two parts:
 Part-I
 Part-II
 Financing rate is determined on the basis of
weighted average yield of 6 months T-bill.
 Currently, this is 8.3%. The SBP provide
refinance to the banks at 7.5% which entails a
subsidy of 0.8%. The spread allowed is 1.5%.
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 Export Refinance: Part I
 It is given on pre- as well as post-shipment basis
to finance the eligible commodities.
 It covers to the extent of 100% of the L/C.
 Available for Direct Exporters (180 days)
Indirect Exporters (120 days)
 Requisites: shipment / delivery of eligible goods
by DE /IDE.
 Exports on consignment sale basis do not qualify
for concessionary finance facility.

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Contd….Export Refinance: Part I
 Scheme is available for:
 Value added commodities except those
mentioned in “Negative List”;
 Direct Exporters (DE)

 Indirect Exporters (IDE);

 Small, Medium and Emerging Exporters (who

reports exported upto equivalent of US $ 2.5
Million in preceding year);
 Trading Companies;

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 Documents Required
 Direct Exporters:
 Application /Undertaking
 Demand Promissory Note

 Copy of Export Order/LC

 Indirect Exporters:
 Application/Undertaking
 Inland Letter of Credit / Standardized Purchase Order
showing the supply of inputs and the amount involved
by the Indirect Exporter to execute the export order.
 Demand Promissory Note
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 Bank Procedure
 This is not complicated. For Part-I, the exporter presents
the irrevocable L/C to his bank and finance is sanctioned
within days.
 For Part-II, the exporter has already a SBP verified export
performance (this is done within a week, if not verified).
Finance is sanctioned within days.
 However, The credit worthiness of client may be verified
by bank at discretion depending on the following factors:
Management Capability of the Relationship with other
borrower financial institutions
Market Reputation of the borrower. Security Analysis
Customers profitability Past Track Record.
Risk Analysis / Sensitivity Industry Trade Outlook.
Analysis.
Financial condition / health.
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 Export Refinance: Part II
 Under Part-II, an exporter may avail the export
finance limit, based on his last year’s export
performance in respect of eligible commodities.
The limit is available on revolving basis.
 Annual revolving limit based on half of the
previous year export performance in respect of
eligible commodities
 Available to Direct Exporters but not to Indirect
Exporters
 Monitoring of performance through EF-1
Statement
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 Requisite Documents
 Duplicate of EE-1, showing exports made in
previous year under both parts of eligible items
 Demand Promissory Note
 Undertaking

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 Procedure for EFS
 Interested exporter can apply to any scheduled
bank for the facility on prescribed form available
with banks.
 After the scrutiny of the documents bank can
grant the facility to the applicant .

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