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Annexure to BPRD Circular No. 44 of 17th December, 1998 REVISED
PROCEDURE ON EXPORT FINANCE SCHEME It has been decided to revise the export finance scheme in order to provide impetus to the exports by the small and Medium Exporters, Emerging Exporters and direct Exporters as defined below:- Small
or Medium Sized Enterprise (SME) is a direct or indirect exporter and
which reports upto equivalent of US,
2,500,000 of direct or indirect export during the
preceding fiscal year. Emerging
Direct Exporter (EDE) means a new exporter, who has not previously
exported products. Indirect
Exporter (ODE) means a manufacturer or suppliers of goods or materials
which is to be used as an inputs for exports. Direct
Exporter includes a commercial exporter/trading company. Financing
facilities under the Scheme shall continue to be available for exporters
with export performance in excess of the upper limit prescribed for the
Small & Medium exporters. The list of ineligible commodities i.e.
"Negative List" shall continue to remain effective. An updated
list of such commodities alongwith their Harmonized Code is attached. The
Scheme shall, however, continue to operate in two parts as at present. The
exporter can avail the facility under both parts of title Scheme provided
that the facility availed under one Part is not in duplication of the
facility availed under the other part of the Scheme. It may be mentioned
that the revised procedure has laid stress on the provision of finance and
refinance to the Indirect Exporters under both parts However, while under
Part II the borrowing entitlements as also the performance requirements
shall continue to remain applicable in respect of the Direct Exporter, the
financing facilities to the Indirect Exporter shall be provided on
specific order basis, and against establishment of Inland Letter of Credit
i.e. 'LC Credit on revolving basis, to indirect exporters, will not be
available. The
financing facilities to all eligible commodities shall be available for
180
days, Banks will 1 however, ensure that the aggregate period of financing
Provided to
both Direct and Indirect Exporters does not exceed 180 days under Both
parts of the Scheme. An
Apox Unit has also been established in the Banking Policy &
Regulations Department to deal with the cases relating to the revised
Export Finance Scheme. Likewise the commercial banks have also been
advised to establish Export Cell for exclusive handling of the
cases/documentation relating to the Export Finance Schedule. OPERATIONS
OF THE SCHEME EXPORT
FINANCE UNDER PART-1 1.
Under Part-I of the Scheme the commercial banks shall provide finance to
the Direct Exporters (DE), against Firm Export Order (FEO) I Export Letter
of Credit (ELC). They shall also provide finance to those parties
(Indirect Exporter IDE) who supply eligible inputs to 'the Direct Exporter
for further processing provided the Direct Exporter has established an inland
letter of credit in favour of such supplier (IDE) where applicable. Illustration A
Direct Exporter (DE) of garments receives a Firm Export Order or Letter of
Credit for export of shirts valued at Rs 1,000,0001 Assuming that he needs
inputs of 'fabric' sewing thread and buttons of the value of Rs.500,000/=
Rs 5,000/= and Rs 2,000/= respectively, he will open three separate iLCs
for Rs.500,OOO/= Rs 5,000/= Rs 2000/= in favour of his Indirect Exporters
(IDE) i.e. his supplier of fabric, sewing thread and buttons respectively,
who would be eligible for concessionary finance under
this Scheme. He may an alternative purchase these inputs against payment,
without opening Inland Letter of Credit (ILC) which would be allowed by
his banker from the loan account through cheques drawn in favour of the
suppliers. 2.
In this regard attention of Banks is also Invited to Prudential Regulation
No. III in terms of which clean facilities granted to finance the export
of commodities eligible under Export Finance Scheme shall be exempt from
the per party limit on clean facilities. Finance to Indirect Exporter
under this Scheme Will also be exempted from the restriction placed in
respect of clean advances under Prudential Regulations. likewise other
relaxation exemptions as are provided to the Exporters under Prudential
regulations for export covered under export finance scheme shall also be
applicable to the indirect exporters. Banks are therefore encouraged to
extend financing under this Scheme against foreign letter of credit and
inland letter of credit. The
Government has a plan to set up a Pre-shipment Export Finance Guarantee
(PEFG} Scheme for the primary benefit of indirect and small and medium
sized exporters as also he emerging exporters. Once the PEFG Scheme is
established, the cover obtained under it will provide guarantees m favour
of the lending banks that make available pre-shipment funding under EFS
and FCIF to Direct/Indirect/Small, Medium and Emerging Exporters and it
will serve as a substitute for collateral Commercial banks are advised to
meet the post shipment export finance requirements of their customers
through re-discounting of export bills in accordance with the rate laid
down in F .E .Circular No.5 of 1998 issued by our 'foreign Exchange
Department, specially in those cases where the bills of exchange have been
drawn by t~9ir customers against LCs. of reputable bank or where not
covered by a L.C, bills have been accepted by the drawees. 3.
Upon establishment of an export Letter of Credit or on receipt of Firm
Export Order in the name of the Orient Exporter film Direct .Exporter
shall approach the financing bank, indicating his financial needs for
inputs on the prescribed format DE-1 (specimen attached). The Direct
Exporter will be under obligation to specify his production and shipment
schedules as also his estimated requirement for purchase of domestic I
imported inputs from his indirect exporter, as also the imported inputs,
if any that he intends to import directly. It may be noted that a
manufacturer exporter does 1101 procure small items of ,inputs only after
receipt of an export order and only to the extent required for shipment of
that export order. In the illustration' given in paragraph 1 above, the
exporter may buy sewing thread and button in bulk in order to meet his
requirements for the next few months. Banks may, therefore, take into ,
account the nature of goods being produced and expected by their client
and provide finance on the basis of his actual needs for production during
the next four months and not restrict it to tile purchase of the
individual inputs to the extent stated in application form DE-1.
The disbursements against the said sanctions shall be made On actual need basis and rejected either through cheques drawn in favour Of the Suppliers of inputs or through ILC to be established on behalf of the Direct Exporter in favour (i.e. suppliers of inputs) .The Government will be settling up an export market/product upgrading matching grants Fund, managed by the Export Promotion Bureau which would be available as an incentive to Direct Exporters Opening LC and for indirect export receiving it. The Direct Exporter may also be allowed to draw the loan to the extent of his own eligible material and value to addition The bank shall however. ensure that the total amount withdrawn by the Direct Exporter through cheques and value of ILC established on his behalf does not exceed the value of the export finance admissible to him against the particular export commitment. 5. The combined period of financing against an export order to the Direct Exporter as also to his suppliers i.e indirect Exporter shall also not extend the permissible period of 180 days from the date of first drawal/disbursement from the loan account. The period of loan to the Indirect Exporter shall be pre- determined on the basis of the period given in the inland LC, and. the finance/refinance where applicable, shall be allowed for the period covered under the ILC, but not exceeding 120 days. 6.
The financing bank shall become entitled to obtain refinance from the
State Bank of Pakistan against finance(s) provided to the Direct Exporter
for manufacturing/ subsequent value addition for execution of the relevant
export order, on production of the documents mentioned in para 4 above and |
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7. While the export of the commodity against said Firm Export Order I Export Letter of Credit, shall remain responsibility of the direct exporter, the indirect exporter would be under obligation to supply the required inputs in accordance with the terms of the ILC, failing which he shall be liable for fines under the Scheme. Payment of such fines shall. however not absolve him from his liabilities to the direct exporter . 8.
On the basis of information contained in Form DE-1 the financing bank
may at the request of the Direct Expoi1er. Open an ILC in favour of
the Indirect Exporter i.e domestic supplier. The banker to the Indirect
Exporter may allow export finance at the concessionary rate applicable
under the Export Finance Scheme to the Indirect Exporter in the same
manner as laid down in para 4 above. 9.
The financing facilities shall be provided by the financing bank to the
Indirect Exporter (IDE) upon submission application on Form IDE-1
including following documents (specimen attached) .to be executed, by the
Indirect Exporter:-
commitment by the Direct Exporter) , 10.
The refinance to the extent of the loans granted by the financing bank to
the Indirect Exporters, under ILC. shall be provided by the concerned
Office of the SBP upon submission of the following documents, within 48
hours from the receipt of application duly completed in ail respect:-
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11.
The loan granted to the Indirect Exporter, alongwith mark up thereon shall
be adjusted upon delivery of the inputs anti payment of documents drawn
under the ILC or at the expiry of the period of 120 days. whichever is
earlier. The Indirect Exporter shall be under obligation to produce the
following documents to the banker of the Direct Exporter. evidencing
utilization of the loan for the purpose manufacturing the input :-
A certified copy each of the above documents containing the acknowledgement of the Direct Exporter, shall also be passed on to the State Bank by the concerned indirect Exporter through its banker who availed refinance from the State Bank of Pakistan The said documents accompanied by the statement "ES" (as per specimen attached) to be filled in by the banker of the IDE concerned, shall be submitted with in 15 days working days from the date of goods receipt notes/delivery challan 12. On deliveries of the domestic inputs and receipt of payment by the supplier i.e. indirect Exporter, the 3mounth(s) of the finance earlier granted in his favour hall be adjusted. Refinance drawn against the said finance shall also be adjusted by the banker of the Indirect Exporter within 3 working days. The payment against ILC shall become a loan disbursement in the name the Direct Exporter who Will become responsible for repayment of the loan and payment of markup, and fines if applicable, and all mark up charges from the date of said transfer shall become by him. The banker of the Direct Exporter shall become eligible to obtain refinance from the SBP against disbursement so made in terms of para 4 above. |
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13.
All the ILC opened in favour of IDE shall bear indication that these have been opened for the supply of inputs for
export & would contain in
the name of export order /ELC. The financing bank of the indirect exporter
exporter shall be under obligation to to certify that the facility availed
by the indirect Exporter was covered by the Export LC or Firm order of the
Direct Exporter A provision to this effects has also been incorporated in
the Form EC-I i.e. the forms to be used by the financing bank to
obtain refinance from SBP. 14. The direct exporter shall be liable to submit the proof of shipment against the relevant Firm Export Order /Export Letter of Credit within 30 days from the data of shipment {last shipment in case of fragmented shipment(s) or from the date of expiry of loan which ever is earlier, In case of shipment documents are not received by SBP office on or before 30 days from the date of the expiry of loan they shall recover fine from the concerned bank treating the refinance case as that of non-shipment. The fine so recovered shall be refunded upon submission of the prescribed documents after adjusting the fine, on account of delayed/short shipment, any and fine for delayed submission of the prescribed documents. In the case of delayed shipment a grace period from the date of expiry of loan upto 30 days from the date of delayed shipment, would be allowed while capacity fine for delayed submission of documents. The concerned office of SBP shall however be under obligation to refund the amount of fine as mentioned herein first within a maximum period of 15 working days from the receipt of the prescribed documents provided they are complete and in order. 15. The Shipping documents required to be submitted by the Direct. Exporter shall be submitted through the bank of the Direct exporter on Form ED-1 and shall include the following.
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16.
In case tl1s Direct Exporter fails to make shipment under the relevant
Firm Export Order / Export letter of Credit on the basis of Which finance
/refinance has been availed by him, he should be under obligation to
produce shipping documents evidencing shipment of the exports of eligible
commodity. valuing the amount of loan in respect of another Firm Export
Order / Export Letter of Credit provided no refinance there against has
boon availed by him or indirect Export under the revised mechanism at the
time of submission of shipping documents. The Bank concerned is authorized
to accept and certify the correctness of the statement of the Direct
Exporter In this regard. 17. Upon receipt of shipping documents, the concerned office of the SBP shall scrutinize the same within a maximum period of 10 working days and would ensure that objections therein are apprised to the bank concerned promptly seeking clarification from the bank Concerned with a copy to the Direct Exporter preferably through fax. The Bank/ Exporter shall be under obligation to submit their clarifications within 15 days from tile receipt of such letter. While scrutinizing the shipping documents the SSP office concerned shall ensure that an eligible commodity covering the value of loan to the extent of aggregate amount of loan provided to Direct and Indirect Exporters (inclusive of the loan provided to Direct Exporter for imported inputs has been shipped. The
refinance availed of by the banker of tile Direct/Indirect Exporter, shall
be repaid to the State Bank within three working days.( the repayment by
the IDE/DE or on the expiry of the refinance period, whichever is earlier.
Likewise in
case of premature payments by the Direct Exporter of the Indirect Exporter
or receipt of export , proceeds prior to the expiry of the refinance
period, the refinance
shall also be adjusted within three working days from such prepayments
premature receipt of export proceeds failing which fine at the
prescribed rates shall
be levied on the bank concerned . EXPORT
FINANCE UNDER PART-II 18.
Under Part-II of the Scheme, a Direct Exporter shall be entitled to avail
finance limit equivalent 50% of his export performance during the
preceding year
(on July-June basis), in respect of specified eligible commodities by
furnishing an-undertaking to the bank as per Form UT-DE-II The DE may
authorize their banker to open ILC(s) in favour of IDE(s) for making
supplies of inputs to him as per procedure laid down in Para 9 above,
within the prescribed authorise
their banker to open ILC(s) in favour of IDE(s) for making supplies of
inputs to him as per procedure laid down in Para 9 above, within the
prescribed |
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limit
as per Form DE-3(shipment attached) The amount of the limit availed of
by the Direct Exporter
as also the amount of ILC(s) Opened in favour of IDE(s)
for supply of domestic
inputs were taken together I shall not exceeding his shipment of limit.
The bank may however sanction
a foreign currency loan in respect of the imported inputs in accordance
with the procedure as and when
laid down by our FED
under:- Proposed FCIF arrangements. 19. The Direct Exporter shall be under obligation to repatriate export proceeds from the export of sanctioned commodities equivalent to 2.0 times of the daily average finance availed by him including finance availed by his Indirect exporter(s) under LC(s) opened by the DE. The limit shall be available to the Direct Exporter on revolving basis like a cash credit account, The amount of the limit availed of by the Direct Exporter as also the amounts of ILC(s) opened in favour by IDE(s) for supply of domestic inputs, shall not exceed the entitlement of limit any point of time It may however be ensured that in individual instance the loan shall not remain outstanding beyond a maximum period of 180 days. 20. On receipt of an application from the Direct Exporter, on Firm "DE-3" requesting for grant financing facilities to the specified Indirect Exporter(s), supply of domestic inputs the financing bank shall open ILC(s) in favour of the said indirect exporter(s) by reducing the entitlement of the Direct Exporter under Part-Il of the Scheme. The bank shall also provide provide financing facilities, to the extent of the extent of his balance entitlement of limit to the Direct Exporter after adjusting amount{s) of ILC{s) issued in favour of the Indirect Direct Exporter against his actual requirement for value addition depending upon manufacturing schedules. 21. Upon submission of application on Form "IDE-2" (specimen attached) by the IDE, the banker of the DE or IDE, as the case may be shall provide finance to the extent of the amount of the ILC (s) to the IDE concerned upon production of the documents as prescribed in para 8 on the basis of which financing facility under Part I is available to the IDE.
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22.
The refinancing to extent of the amount released by the financing
bank of the direct
Exporter(s) to the indirect exporter(s), against ILC(s) shall be provided
by the concerned office of the SBP to the banker of the indirect /Direct
exporter, upon submission of the following documents (as already spelt out
in para 9 above.
The
amount and period of refinance against amount released by the banker of
the Direct Exporter to each indirect Exporter shall not exceed as
mentioned the relevant. The
amount and period of refinance against amount released by the banker of
the Direct Exporter to each indirect exporter shall not exceed as
mentioned in the relevant. 23.
The loan against to be Indirect exporter(s) alongwith mark up thereon,
shall be adjusted upon submission of the documents evidencing delivery of
the inputs and negotiation of ILC(s). The Indirect Exporter(s) shall be
under obligation to produce the following documents to the banker of the
Direct exporter, evidencing delivery/acceptance of the domestic inputs by
him to the direct exporter as per procedure laid down in para-11.
24.
On production of documents mentioned in para 23 above, evidencing
deliveries of the
domestic inputs the amounts of the loans earlier granted in favour of
Indirect Exporter(s) shall be transferred in the name of the Direct
Exporter and all mark up charges from the date of said transfer shall be
borne by the Direct Exporter. The refinance earlier availed by the bank of
the Direct Exporters, against disbursment(s) released to Indirect
Exporter(s) shall continue to remain outstanding release to Indirect
exporter(s) shall continue to remain outstanding all the morning period or
upto maturity of loan which ever is earlier.
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FINE
UNDER THE SCHEME. 28.
With the modification in the procedures to availing finance refinance,
increase in the period
of financing and other relaxation in the scheme as spelt out above, the
scales of fine under the Scheme shall be as under:- i)
If an indirect Exporter who had obtained under Part I of the Scheme fails
to supply the goods as per schedule of delivery to the Direct. Exporter or
a Direct Exporter fails to ship the goods involved, he shall be subjected
to 'fine on account of non shipment at the rate of Paisa 37 per day per
Rs.1000/= or part thereof. ii}
In case the indirect exporter
or the ships the goods
subsequent to the expiry of loan, he shall be liable to pay fine only for
the period of delay In supply shipment at the rate of Paisa 37 per day
per Rs. 1000 or part thereof. iii}
In case a Direct Exporter who had obtained finance under Part II of the
Scheme, fails to match his, borrowings by his export performance, he shall
be subjected to fine of Paisas 37 per 1000 or part of the borrowing
product. iv)
In case the indirect exporter who has availed finance/ refinance under
Part-II of the Scheme,
fails to supply the domestic, inputs as per terms of the ILC, he shall be
liable for fine at the rate of Paisa 37 per day per Rs 1000 or part
thereof on the entire amount of financial availed by him. In case
the supplies are made subsequently, fine for delayed supplies shall
be recovered from him for the period involved at the same rate. v) If a bank. tails to deposit with the State Bank, towards repayment of the respective refinance loan, the amount of repayment made to it by/on account of the exporters/supplier within 3 days of receipt of the amount by it, it shall be subjected to a fine at the rate of paisas 60 per Rs. 1000/- or part thereof on the amount Involved till the amount is deposited with the State Bank. vi) Fines for any Other defaults by the Direct/Indirect Exporter shall be recovered at the rate of Rs 2000 for the default and Rs. 100 per day for each day of default.
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FORM OF APPLICATION FOR CLAIMING FINANCING FACILITIES UNDER EXPORT FINANCE SCHEME BY THE INDIRECT EXPORTER FOR SUPPLY OF LOCAL INPUTS AGAINST ILC
(NAME OF THE BRANCH) NAME OF THE BANK (PLACE) Dear
Sir, FINANCING FACILITY UNDER EXPORT FINANCE SCHEME AGAINST SUPPLIES OF LOCAL INPUTS UNDER ILC We have been authorised to supply the local inputs (name of the commodity) by M/s. (Name of the Direct Exporter) against ILC No. ___________ dated _________ amounting to Rs. _____________ with validity upto _________ and established by (name of the bank). We therefore request you to provide finance of Rs. ________ for _________ days under the terms and conditions of there Export Finance Scheme. The following documents are submitted as prescribed under the scheme.
we undertake to repay the finance on the expiry of the period or earlier upon supplies made to the Direct Exporter named above and negotiate the documents under ILC involved. WE further undertake to submit relevant proof of supplies to your bank for submission to the banker of the Direct Exporter and the concerned office of State Bank of Pakistan. Yours
faithfully, (Name & Address of the Indirect Exporter)
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FORM OF APPLICATION FOR CLAIMING FINANCING FACILITIES UNDER EXPORT FINANCE SCHEME BY THE INDIRECT EXPORTER FOR SUPPLY OF LOCAL INPUTS AGAINST ILC
(NAME OF THE BRANCH) NAME OF THE BANK (PLACE) Dear
Sir, FINANCING FACILITY AGAINST SUPPLIES OF LOCAL INPUTS UNDER ILCs BY THE DIRECT EXPORTER OUT OF ENTITLEMENT UNDER PART-II OF EFS We have been authorised to supply the local inputs (name of the commodity) by M/s. (Name of the Direct Exporter) against ILC No. ___________ dated _________ amounting to Rs. _____________ with validity upto _________ and established by (name of the bank). We therefore request you to provide finance of Rs. ________ for _________ days under the terms and conditions of there Export Finance Scheme. The following documents are submitted as prescribed under the scheme.
we undertake to repay the finance on the expiry of the period or earlier upon supplies made to the Direct Exporter named above and negotiate the documents under ILC involved. WE further undertake to submit relevant proof of supplies to your bank for submission to the banker of the Direct Exporter and the concerned office of State Bank of Pakistan. Yours
faithfully, (Name & Address of the Indirect Exporter)
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UNDERTAKING (for Direct Exporter) UNDERTAKING TO BE SUBMITTED TO THE BANK BY THE EXPORTER AT THE TIME OF OPENING OF AN INLAND LETTER OF CREDIT AGAINST EXPORT LETTER OF CREDIT/FIRM EXPORT ORDER (To be furnished on non-judicial stamp paper) The Manager, ___________(Branch) ___________(Bank) ___________(Place) Dear Sir, We confirm having requested you to open an irrevocable Inland Letter of credit (ILC) for the value of Rs. ______________ in favour of M/s. _______________ for supply of ______________________________ required for making exports under the irrevocable export letter of credit (ELC)/Firm Export Order (FEO) the particulars of which are given below :-
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2.
We hereby confirm that the Firm Export Order (FED) against which we have
requested opening an Inland letter of credit would be covered by an Export
Letter of Credit to be opened subsequently the details of which will be
furnished in due course but not later than expiry of the ILC against which
goods will be supplied to the Direct Exporter. 3.
It is understood that the ILC has been established and financed by you
under the Export. Finance Scheme against Export Letter of Credit/Firm
Export Order and we in our capacity as Direct Exporter shall remain liable
for fulfillment of all the obligations under the said Scheme. 4.
It is expressly understood that non-performance by the Indirect. Exporter
(supplier of inputs/finished goods) under the ILC, for any reason,
whatsoever shall not, in any manner absolve us from, fulfillment of our
obligations as Direct "Exporter under the Scheme . 5.
We certify that supplies of inputs/finished goods made under the ILC are
required and shall be used by us. for the 'manufacture and export of only
such commodities which are duly eligible for financing, under the Export
Finance Scheme as on date of this Undertaking. 6
We hereby confirm arid agree that in the event of failure to fulfill any
of our obligations under the ~ort Finance Scheme, you have our irrevocable
authority to recover from us and debit our account with fine at the rate
prescribed by the State Bank from time to time under the Scheme on the
amount of the, finance availed by us. 7.
We certify and confirm that we have, not obtained from any other bank any
finance against and on the strength of the above ELC/F.E.O. In the event
of a false settlement made by us in this behalf, we undertake to be liable
to pay fine at the rate prescribed for-non-performance under the Export
Finance Scheme.
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8.
We do hereby further unc1erstand, confirm/and undertake that, upon
production of documents evidencing supply of goods to us by the Indirect
Exporter(s) the liable by for the cost of goods so furnished to -us by the
Indirect Exporter, shall as fro~ the date of such supply, stand in our
Name till the realization of proceeds under the Export letter of credit or
earlier if so repaid by us. We further confirm and, undertake that if the
finance obtained by us against the above ELC/FEO is repaid earlier than
the expiry date, we shall continue to remain liable to submit, to you the
relative proof of the shipments under the ELC/F.E.O. referred to above
hereinbefore. Authorised
Signature of the Exporter. Signature
verified Bank's
Authorised Signature. |