Units exporting up to $5mln eligible for LTTF: SBPBy our correspondent

KARACHI: The State Bank of Pakistan (SBP) on Tuesday said that Long Term Financing Facility (LTTF) was available to the export oriented units which have annual exports up to $5 million.

The central bank in its detailed guide on the LTTF said the facility was also available for those exporters having at least 50 percent of their sales constituting exports.

The SBP said the LTTF was introduced to facilitate export growth. Under the scheme participating financial institutions (PFIs) ie banks provide long-term financing of up to 10 years including a maximum grace period of two years. The central bank said that a borrower has the option to borrow for three tenures, such as three, five and 10 years at financing rate of six percent per annum. However, mark-up rate for the borrowers of the textile sector is five percent per annum effective from November 2, 2015. “The financing rates for end users shall remain locked in for the entire period, once the facility has been disbursed by the banks or development financial institutions,” the SBP said.

The central bank said that maximum borrowing limit for a single export oriented unit was Rs1.5 billion under the LTFF. “Further, in case of larger financing requirements, ie over Rs300 million, PFI are suggested to provide finance under consortium arrangements to diversify risk,” the SBP added.

The financing facility under the LTTF is subject to inspection by the State Bank to ensure that the person has been allowed as per the terms and conditions of the facility.

“The SBP can appoint an independent consultant to verify the use of refinance under the LTTF for the purpose spelt out under the facility,” the central bank said, adding that in case the reports of banking inspection department of the SBP or appointed consultant points out irregularity on the part of the financing PFI or the borrower, SBP can recover the amount of refinance granted to the PFI with fine.

The SBP said that banks are required to undertake the due diligence process as per their lending policies before sanctioning the loan to protect their interests subject to the respective prudential regulations.

The central bank directed the banks that they should not take more than two months in evaluating an application for financing under the facility from the date of receipt of complete information from the borrowers.