Circulars/Notifications - Domestic Market & Monetary Management Department  
 DMMD Circular No. 17 of 2012
September 04, 2012  

The Presidents/ Chief Executives,
All Commercial Banks

Dear Sirs / Madams,

 

Competitive Auctions of Turkish Lira loan facility

Please refer to the FE regulations governing Trade Loans against FE25 deposits; and the Currency Swap Arrangement executed between State Bank of Pakistan (SBP) and the Central Bank of Republic of Turkey (CBRT) on 01Nov2011. In this regard, following instructions are issued with immediate effect:

1- All commercial banks will be allowed to take FE25 deposits and extend FE25 loans in Turkish Lira (TRY) for financing of Imports / Exports in accordance with our prevailing instructions on FE25 loans / deposits.

2- In order to provide TRY funding to scheduled banks, so that they can on-lend the TRY to importers / exporters with underlying Trade documents in TRY, SBP will conduct competitive auctions of Turkish Lira loan facility using proceeds of the currency swap transaction with CBRT.

3- SBP will conduct ‘uniform price’ competitive TRY auctions in 3 and 6 month tenors. Only scheduled banks will be eligible to participate in these auctions

4- SBP’s lending to scheduled banks in TRY will be on execution of a Promissory Note by the scheduled bank in favor of SBP and backed by an L/C or a firm trade contract.

5- Participation in auctions will be dependent on the submission of documentary evidence of:

a- Underlying Export or Import  bills denominated in TRY

b- Tenor of the Trade documents should be equal or more than the tenor of the TRY loan request from SBP.

6- On the maturity date of the TRY loan, bank will be liable to repay the loan to SBP.

7- Pricing of the TRY loan auction will be benchmarked to the ‘reference rate’ which will be announced by SBP along with the auction details. Participation in TRY loan auction will be based on spread over / under the ‘reference rate’. Minimum participation amount will be TRY 5 million and in multiples thereof.

8- In order to provide sufficient time for banks to arrange on-lending of funds to importers / exporters, TRY auctions will be announced at least 14 days in advance and will be settled on T+2 basis.

9- Details of auction dates, announcement of the auction results, settlement dates and corresponding cut off timings will be announced on Reuters pages SBPK21 and SBPK22.

10- In case of pre-payments from the customer, banks will be liable to repay TRY to SBP within 2 working days from the pre-payment from the customer. There will be no penalty charged by SBP for pre-payment. Accrued interest will be charged by SBP.

11- TRY borrowings from SBP, as described above, will not be subject to maintenance of CRR in Cash Reserve Account (CRA) and Special Cash Reserve Account (SCRA).

All Banks are advised to bring the above to the notice of their constituents, for strict compliance.



Yours Sincerely,

Sd/-

Muhammad Ali Malik
Director
       
Home
About SBP
Publications
Economic Data
Press Releases
Circulars/Notifications
Laws & Regulations
Monetary Policy
Help Desk
SBP Videos
Feedback
Contact us
What's New?
Speeches
Online Tenders
Web Links

Educational Resources
Regulatory Returns
Library
Rupey ko Pehchano
Events
Zahid Husain Memorial Lecture
Careers
Sitemap
 
Best view Screen Resolution : 1024 * 768
Copyright © 2016. All Rights Reserved.