Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular Letter No. 3 of 2020
March 26, 2020

The Presidents / Chief Executive Officers,
All Banks/DFIs

Dear Sirs/Madams,

REGULATORY RELIEF TO DAMPEN THE EFFECTS OF COVID-19 -
PRUDENTIAL REGULATIONS FOR SMES FINANCING

The coronavirus (COVID-19) has been evolving as a strain to the global economy including that of Pakistan. Therefore, to dampen the adverse effects of COVID-19 and to enable the banks/DFIs continue to fulfil their role in funding the real economy, following has been decided:

2. Rescheduling / Restructuring of Financing Facilities Regulation SE R-9 and ME R-5 of Prudential Regulations for SMEs Financing)

  1. Banks/DFIs, upon a written request of an obligor received before 30th June 2020, will defer repayment of principal loan amount by one year; provided that the obligor will continue to service the mark-up amount as per agreed terms & conditions. The banks/DFIs will convey their decision to the obligor within 15 working days after the receipt of the written request. In case, banks/DFIs decide to decline the request of the obligor, they will record reasons for this decision in their response to the obligor. A copy of their response to the obligor will be submitted to the Director, Offsite Supervision and Enforcement Department (OSED), State Bank of Pakistan. The banks/DFIs will also submit the detail about deferments granted by them to their borrowers at the end of each week, as per attached format, to Director, OSED. The abovementioned deferment will not affect the credit history of the obligor and accordingly will not be reported in the ECIB as restructuring.

  2. The financing facilities of such obligors, which are unable to service the mark-up amount or need deferment exceeding one year, may be rescheduled / restructured upon their request. If the rescheduling / restructuring is done within 180 days of the loans being past due, such financing facilities will continue to be treated as regular and reported in the ECIB accordingly.

  3. The Banks/DFIs shall not classify the financing facilities of such obligors which have requested for extension of grace period [2(i)] or rescheduling / restructuring [2(ii)], unless the payment obligations are past due by 180 days. If the deferment or the rescheduling / restructuring is not executed successfully within the specified period of 180 days past due, such financing facilities be classified as per prevailing instructions of PRs for SME Financing.

The aforesaid instructions, specified at 2 (ii-iii), shall stand expired on March 31, 2021 and afterwards prevailing instructions on the subject shall be applicable. 

3. Moreover, the aforesaid treatment shall not be applicable on non-performing loans as of 31-Dec-2019.

4. All other instructions on the matter shall, however, remain unchanged.

5. Please acknowledge receipt.

Encl: Weekly Data Reporting Format


Yours sincerely,

-Sd-

(Dr. Mian Farooq Haq)
Director

 
 
 

       
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