Head/Principal Offices of
all Authorized Dealers
in Foreign Exchange,
Dear
Sirs,
TRADE
LOANS UNDER FE 25 OF 1998
In
terms of BSD Circular No. 18 dated the 31st March, 2001,
Banks have been allowed to use/invest their deposits mobilized
under FE 25 for financing of Import/Exports. We have been
receiving various queries on the above subject. Necessary
guidelines on the subject are as under:-
Exports
(For financing pre-shipment, discounting/purchase of documents)
a) Trade loan facility under FE 25 scheme is entirely on
self-liquidating basis from export proceeds.
b) At the time of allowing the facility, the foreign exchange
component of such facilities should be surrendered to an
Authorised Dealer at the buying rate.
c) Authorised Dealers are allowed to extend
the pre-shipment finance after taking all necessary precautionary
measures. Such facilities should be backed by an L/C or
firm contract(s). In case of non-shipment/cancellation/partial
shipment against such L/Cs or firm contract(s) and subsequent
adjustment of foreign currency facilities, Authorised Dealers
would furnish details of such Contract or L/C to the State
Bank for authority to purchase foreign exchange from inter-bank
market. On receipt of the confirmation from SBP, Authorised
Dealer will allow the exporters to purchase foreign currency
from inter-bank market to adjust the liability.
d) Authorised Dealers are allowed to adjust
foreign currency loan against preshipment finance from the
proceeds of the post shipment facility, against which the
pre-shipment facility was allowed earlier, like discounting
of foreign bills in foreign currency. In case of discounting
of foreign bills in Pak rupees, the preshipment facilities
can be adjusted through interbank market. It should be ensured
that such export proceeds are repatriated within 6 months
from the date of Bill of Lading.
e) On receipt of export proceeds, the Authorised
Dealers would adjust the loan outstanding against that export
bill and PRC can be issued to the extent of export proceeds
at exchange rate on which original financing was allowed
by converting into Pak Rupees accordingly. The reporting
of ‘E’ forms would be done on the date of receipt
of export proceeds.
f) All bank charges on exports and interest
on such export loans would be recovered from inter-bank
market against form ‘M’ that would be submitted
alongwith the monthly foreign exchange returns.
g) In all those cases where the exporters
fail to repatriate the export proceeds after shipment of
goods and are unable to adjust the foreign currency loan
outstanding against such exports, Authorised Dealers are
advised to inform the State Bank alongwith details of such
Contract or L/C requiring authority to purchase foreign
exchange from inter-bank market. On receipt of the confirmation
from SBP, Authorised Dealer will allow the exporters to
purchase foreign currency from inter-bank market to adjust
the liability.
h) For outstanding forward cover and subsequent
financing of export bills in foreign currency, instructions
contained in Para 10 Chapter IV of FE Manual – 2002
would apply.
i)
The pre-shipment finance allowed against an L/C or firm
contract would only be adjusted through discount of documents
against the same L/C or firm contract.
Imports (Financing against Import Bills)
a) The facility for imports can be allowed only from the
date of actual execution of import payments in foreign currency
by creating a foreign currency loan against the importer.
The maximum period of such loans should not exceed six(6)
months from the date of disbursement.
b)
For repayment of the loan, the Authorised Dealers are allowed
to purchase foreign currency to the extent of loan from
inter-bank market at the prevailing exchange rate on the
date of repayment in order to adjust foreign currency loan
outstanding against such importer(s).
c)
Authorised Dealers are allowed to purchase foreign currency
from inter-bank market to cover the interest amount on such
loans against submitting ‘M’ forms alongwith
monthly foreign exchange returns.
d)
The reporting of forms ‘I’ would be on the date
of actual payment against the documents.
e)
No forward cover will be provided to importer(s) who avail
foreign currency finance against FE 25. The forward cover
facility is allowed only against outstanding import commitments.
2.
The reporting procedure would be as under:
Lending
to Exporters.
At
the time of extending the loan, the transactions will be
reported on Schedule ‘J’ as receipt of loan
under the Code No.9711 (as the bank will purchase the foreign
exchange component of the loan and disbursement will be
made in equivalent Pak Rs.).
At
the time of adjustment of loan at realization of foreign
exchange proceeds of exports, the realization of export
bill will be reported under relevant code vide code list
No.4 on Schedule A-1 and the amount of loan and interest
repaid as sale on Schedule E-4 under code No.1712 and 1224
respectively vide code list No.7.
Lending
to Importers.
At
the time of extending the loan, there will be two sides
to the transaction, payment abroad against import will be
reported on Schedule E-2 under relevant Code vide Code list
No.6, while the loan will be reported on Schedule ’J’
as receipt under Code N o.9711.
At
the time of adjustment of the loan, the amount of loan will
be reported as sale on Schedule E-4 under Code No.1712 vide
Code list No.7 of Circular No.52 of 1984. The amount of
interest paid would be reported as sale on Schedule E-4
under code No. 1224 vide code list No. 7.
3.
Please advise your branches and other constituents accordingly.
|