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3 The objective is to encourage technological
upgradation of Export Oriented Projects
(EOPs) by provision of finance for import of
machinery; and,
3 Finance Export Oriented Projects (EOPs) for
incentives announced by the government
under in Trade Policy 2003- 2003-0404::
3 banks/DFIs to
Under LTF, banks/DFIs to provide
provide financing
financing
facilities to the
facilities the eligible
eligible borrowers
borrowers projects
projects for
for
the import
the import of plant
plant machinery
machinery  equipments
equipments and
and
accessories thereof
accessories not manufactured
thereof not manufactured locally 
locally
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Preference for
3 Preference for provision
provision of financing to to SME
SME
sector. At
sector. At least 50%
50% of of the
the amount
amount shall
shall be
utilized for
utilized for financing
financing to borrowers
borrowers under
under SME
SME
sector .
The borrower
3 The borrower shall
shall be
be required
required to
to deposit
deposit the
the
required equity
required equity before
before opening
opening of L C intointo an
an
³Escrow Account´
³Escrow Account´ with
with bank
bank providing
providing the
facility under
facility under the Scheme.
The facility
3 The facility shall
shall not
not be
be admissible
admissible in
in case
case of
of
already imported
machinery already imported as
as also
also for
for
commercial importers
commercial importers or or trading
trading houses etc.
etc. or
or
for establishment
for establishment BMR
BMR of of new
new projects
projects in
in
spinning weaving
spinning weaving sectors
sectors in the
the Textile
Textile Group. 
  
3 The projects/units
The projects/units which
which export
export at
at least
least 50
50% % ofof
their annual
their annual production directly or or indirectly
indirectly
3 Borrowers having
Borrowers having export
export overdue
overdue bills
bills of
of more
more
365 days
than 365 days shall
shall not
not be entitled for the
scheme
scheme
3 †ew entities
†ew entities having
having nono previous export,
export, the
the
sponsoring
sponsoring directors/partners/sole
directors/partners/sole proprietor
proprietor
must
must have export related
have export related performance
performance at at their
their
credit either
credit either as
as an
an employee
employee or
or partner
partner or
or paid
director of
director of any other existing
existing exporting entity
entity in in
the relevant
the relevant field.
field.
3 Financing bank / DFI DFI shall
shall have
have discretion
discretion to to
evaluate and
evaluate and decide
decide about
about the
the potential of
of the
the G
borrowing entity to to export.
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3 The financing
The financing is is available
available on
on C&F
C&F basis
basis and is
is
considered by
considered by banks
banks atat a maximum
maximum debt/equity
debt/equity
ratio of
ratio of 80
80::20. The financing
20. The financing bank
bank can
can ask for
for
higher contribution
higher contribution of of equity from
from the
the borrowers.
3 Sponsor is
Sponsor is required
required toto contribute
contribute his
his equity
equity share
share
in an
in Account as
an Escrow Account as a subordinated
subordinated loanloan to
to
the borrowing company
the company  which
which shall remain
remain
subordinated to
subordinated to the
the bank
bank for
for the
the entire
entire period
period for
for
the loan
the loan
3 The loan
The loan shall
shall be
be repayable
repayable in a a maximum
maximum period
period
of 7.5 years
of years including
including a maximum
maximum grace
grace period
period
of 1.5 year
of year
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3 The borrower
The borrower shall
shall be
be under
under obligation
obligation toto make
repayment of
repayment of the
the facilities
facilities in
in equal
equal half
half yearly
yearly or
or
quarterly installments.
quarterly

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3 The financing
The financing is is provided on first first--come- first
come-first
served basis
served basis within
within limits
limits allocated
allocated byby SBP.
SBP.
3 The cost
The cost of Insurance,
Insurance, transit
transit insurance
insurance andand
other import
other import incidentals
incidentals etc shall
shall be
be borne by by the
the
borrower.
3 There
There will
will be no
be no maximum
maximum limit for
limit
for
borrowing
borrowing by the
by the prospective entrepreneurs
prospective entrepreneurs
under this
under this Scheme.
Scheme.
3 In case
In case of
of large
large financing requirements
requirements i.e. i.e. over
over
300 million,
Rs. 300 million, it it would
would bebe prudent
prudent for
for banks /
to provide
DFIs to provide the the facilities
facilities under
under consortium
consortium
arrangements to
arrangements to diversify
diversify risk
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3 This is preceded by by verification
verification of of credit
credit reports
reports
on suppliers
on suppliers of of machinery/plant etc etc as is
as is also
also
required.
3 This
This process
process also includes
also includes appraisal
appraisal of
of the
manufacturer/supplier prepared
manufacturer/supplier prepared by by the
the technical
technical
staff of
staff of the
the Banks/DFIs on on the
the
basis
basis of
of the
the
information
information available
available from
from the existing
the existing users
users
of the
of machinery supplied by
the machinery by the
the same
same
manufacturers/suppliers.
3 Sanction is
Sanction is linked
linked to
to risk
risk profile
profile of
of borrower
borrower 
3 The Bank/DFI
The Bank/DFI shallshall not,
not, take
take more
more than
than two
two
months to
months to evaluate
evaluate the request
request of
of the
the borrower.
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3 Disbursement is
Disbursement is released
released by
by financing
financing bank
bank DFI
DFI
against LC after
against after ensuring
ensuring that
that all
all formalities
formalities have
have
been completed
been completed in in accordance
accordance with the the terms
terms of
of
agreement
agreement between
between the supplier
the supplier and the
and
the
purchaser of
purchaser of the machinery (borrowers).
the machinery

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3 Yhere financing
Yhere financing isis availed
availed for
for a maximum
maximum
period of
period of 7.5 years
years the repayment
repayment of of loan
loan is to be
be
made in
made in 12
12 equal
equal half
half yearly
yearly or
or 24
24 equal
quarterly
quarterly installments,
installments, commencing
commencing after aa
after
grace
grace period
period of 1
of 1.5 years;
3 If the
If the financing
financing isis availed
availed for
for a maximum
maximum period
period
of 5 years,
of years, the repayment
repayment is to be be made
made in
in 8
equal half
equal half yearly
yearly installments
installments or or |o equal
|o equal
quarterly installments,
quarterly installments, commencing
commencing afterafter a grace
grace
period of 1 year.
period
3 For financing
financing availed
availed for 3 years, repayment
repayment
shall be
shall be made
made in
in 5 equal
equal half
half yearly installments
installments
or 1010 equal
equal quarterly installments, commencing
after a grace period
after period of of 6 months. 
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3 For financing
For financing is is availed
availed for
for 2 years, repayment
repayment is
to be
to be made
made inin 4 equal
equal half
half yearly
yearly or
or 8 equal
equal
quarterly installments
quarterly installments without
without any grace period.
3 The banks/DFIs
The banks/DFIs shall shall not
not take
take more
more than
than two
two
months to
months to examine
examine the feasibility
feasibility of
of any
any
project
project where
where finance
finance is required.
is required.
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3 This is not complicated. For Part-
Part-I, the exporter presents
the irrevocable L/C to his bank and finance is sanctioned
within days.
3 For Part-
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.
3 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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3 Finances are made available for purchase of the
locally manufactured machinery to the investors /
industry for their projects by the approved DFIs
and commercial banks.
3 Yhile the facility is sanctioned to the purchaser,
responsible to repay funds so disbursed, the
finance is provided to manufacturer.
3 It is ensured that appropriate debt equity ratio and
other Prudential Regulations are observed in all
cases.
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3 Finances are made available for purchase of the
locally manufactured machinery to the investors /
industry for their projects by the approved DFIs
and commercial banks.
3 Competitive Prices:
Prices: Selection of machinery is
done on competitive price basis by obtaining 3
quotations/bids from manufacturers.
3 Approval of quotations:
quotations: The quotations/bids are
to be approved on price competitiveness.
3 In case of acceptance of quotations other than
lowest one, Banks should exercise special care.
Justifications and specific reasons should be
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3 Ñ   A  :: Banks have to ensure that
manufacturer has the capability of manufacturing
the machinery. For this, Inspection Report on the
manufacturer has to be prepared by the Bank after
conducting inspection facilities of manufacturers.
3 The reports contain information on manufacturing
capability of machinery involved, adequacy of
technical personnel, their know-
know-how, design
facilities and the manufacturers' previous
experience.
3 There is no maximum limit for borrowing. If the
borrowing demands exceed Rs. 300 million it is
provided through consortium financing.
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3 The facility is be available only to the local
content of machinery. Yhere this value falls
below 20%,
20%, it shall not qualify for the financing
facilities.
3 Banks have to ensure that the machinery being
manufactured is supported with a valid contract
for supply and the buyer has the capability to
install, operate and produce desired results.
3 The repayment period ranges from six months to
two years for the manufacturers and up to a
maximum of seven-
seven-and-
and-a-half years for the
purchasers of LMM.
3 Financing facilities under the scheme are not
available for trading purposes. |·
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3 SBP will reimburse the amount disbursed by
banks. It will sanction a refinance limit to
individual banks.
3 The banks can receive refinance upto 100%
100% of
the finance which it provides for purchase of
machinery.
3 Application for this is submitted to the Chief
Manager, State Bank of Pakistan, Islamabad.
3 Banks deposit the recoveries realized by them
with the SBP within 3 days.
3 The banks are not allowed to take more than
one month to examine the feasibility of any
project seeking financial facilities.
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3 The bank has to decide about approval or
disapproval of the borrowers¶ request within 60
days.


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3 The list of eligible industries includes: Fisheries
/dairy and livestock products; light engineering;
marble and granite; gems & jewellery; leather
manufacturers & garments; boat manufacturing;
local vendors manufacturing parts of automobile;
powerlooms/auto/ airjet for powerloom clusters
in different parts of Pakistan; units to be set up in
the ceramic clusters being established in the
country; equipments for cutting and polishing
marble & granite and manufacturing of
handicrafts.

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3 Financing under the scheme can also be availed
of for setting up of units for preservations /
packaging of fruits and vegetables; wooden
furniture & handicrafts; machinery for knitwear
and hosiery industries; machinery/equipments
used in the thermal/hydro power projects;
machinery for setting up of flour mills (for SMEs
only); machinery for rice husking units (only in
the SME sector); agriculture equipments
including water sprinklers; transport equipments
excluding cars but including commercial vehicles
for business use, manufactured/assembled in
Pakistan with at least 50%
50% deletion; and
machinery for manufacturing of the pulp board.
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