Circulars/Notifications - Banking Supervision Department  
 BSD Circular No. 41
30th   October, 2001  

All Banks, 

Dear Sirs,

Refinance facility under the Export Finance Scheme
for Consultancy Services.

 

The Government of Pakistan has accorded “deemed export” status to the foreign earnings remitted into Pakistan against consultancy services in various service sectors of  economy such as medical, pharmaceutical, engineering, accountancy, management, financial services, wholesale, distribution and retail trade, transportation, storage and communication, tele-communication services, educational services, real estate development, hotel and tourism/tourism related services, technical testing facilities and consultancy services etc. which are being rendered by various Pakistani enterprises by way of designing, solution providing, surveys, feasibility preparation, marketing and promotional activities including local market analysis, studies, product development, handling of / and transfer of technology assignments, warehousing, manufacturing and distribution etc. on behalf of their foreign principals. The foreign earnings against all such consultancy services would now henceforth be treated as export proceeds and all consultancy services mentioned above would qualify for export finance facility under Part I of Export Finance Scheme for a period not exceeding 180 days at the rates prescribed under the Scheme.  The facility would be available on case by case basis to qualifying enterprises / companies.  The concerned enterprises would, therefore, have to determine their financing needs against agreement / contract executed by them for providing consultancy services to their principals and would be required to liquidate the same from the repatriation of export proceeds received from their principal / buyer abroad, while the facilities under Export Finance Scheme shall be available for the maximum period of 180 days. The banks are advised to provide financing facility to the qualifying enterprises under the Export Finance Scheme. The realization of proceeds against consultancy services rendered by the company shall be made as prescribed by our Exchange Policy Department. 

2.            Accordingly, since exports from Pakistan are subject  to ‘E’ form procedure, the ‘E’ form cannot, however, be made applicable to the export of services rendered by supplier of above consultancy service providers as such type of exports do not take place physically. As such, the respective consultants will intimate to their banker on the following format the details of export of services :-

 

Name of the foreign buyer

Nature of Services

Date and period of the service contract

Amount of the service contract

Expected period of realization

Expected date on which services will be provided.

Remarks

1.

2.

3.

4.

5.

6.

7.

The Authorized Dealer concerned will maintain a separate record of such exports and ensure timely repatriation of the export proceeds on the basis of the instructions contained in Chapter XII of the Foreign Exchange Manual. A monthly report will also be  furnished to the Junior Joint Director (General), Exchange Policy Department, State Bank of Pakistan, Central Directorate, Karachi. 

3.            Applications for providing refinance against finances provided by banks for export of consultancy services to be rendered by Pakistani enterprises relating to sectors specified in para 1 above will be submitted by the banks to the concerned office of the State Bank on format as per specimen attached  duly supported by the following documents :- 

i)                    An agreement / contract between the Pakistani  enterprise(s) and their foreign principal specifying the nature of Consultancy Services to be rendered by the Pakistani enterprise / company alongwith value of such service, duration of service involved and the schedule of payment. 

ii)                  The information as at  i ) above  alongwith the programme of  services to be rendered with period  and cost shall be duly attested by the financing bank. 

iii)                 Schedule of financial requirements of the borrowing firm duly attested by the bank with reference to the relative contract, indicating the amount required at various intervals in line with schedule at ii) above so as to ensure that the finance obtained is liquidated within 180 days of its drawing from the bank. 

iv)                Indication of the amount already obtained by the borrowing enterprise / company by way of advance from their principal abroad, if any, which shall not qualify for financing as usual. 

v)                  An  undertaking  from  the  borrowing enterprise / company  on  the  enclosed  format (Annexure- A) 

vi)                D. P. Note 

The grant of finance shall be subject to the receipt of satisfactory feedback about the principal from his banker abroad as also on a declaration from the borrower confirming authenticity of the contract. 

4.         The terms and conditions of Part-I of the Export Finance Scheme relating to fine, submission of returns and statements to the State Bank of Pakistan etc. will, mutatis mutandis, apply in these cases as well.  However, the requirement to export of goods, will be substituted with the requirement to perform the consultancy services as per original contract.

5.         As consultancy services would not entail any visible exports, Authorized Dealers are, therefore, advised to report realization of services charges against the funds provided to them by the concerned Office of the State Bank as per arrangements prescribed by our Exchange Policy Department in the following  new code No. and schedule as under :-

 

Code List No.5 

Invisible  Receipts

F - Miscellaneous  Services.

 

Purpose

Description

Schedule

Code No.

 

 

 

 

Services in medicine, medical, pharmaceutical, engineering, accountancy, management, financial services, wholesale, distribution and retail trade, transportation, storage and communication, tele-communication services, educational services, real estate development, hotel and tourism/tourism related services, technical testing facilities and consultancy services etc - Export of.

Remittance - receipt of Export Services

 

J / 0-3

9563

6.         The following documents will be required to be submitted within  30 days from the expiry of the loan or liquidation of the facility if repaid earlier then the maturity of the loan, whichever is earlier to SBP as evidence of performance under the relevant contract / agreement:-

a)                  Copy of Invoice(s) raised against the services made.

b)                  EPRC / Credit Advice.

c)                  Form at Annexure - D 

Please acknowledge receipt.

Annexure-A,B,C,D.

Yours faithfully,
(Kazi  Abdul  Muktadir)
Director
       
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