The
Presidents/ CEOs,
All Banks/DFIs,
Dear
Sirs / Madam,
Scheme
for Long Term Financing for the Export
Oriented Projects (LTF-EOP) – Clarifications thereof
Please refer to the captioned Scheme circulated vide BPD
Circular No. 14 dated 18th May, 2004 alongwith other instructions
issued from time to time.
2. Pursuant to issuance of our SME&MFD Circular Letter
No. 06 dated October 17, 2006 on the captioned subject,
some of the stakeholders have raised additional issues requiring
our clarifications. In order to ensure smooth operations
of the Scheme and to facilitate the transition of debt equity
swap by banks/DFIs, the issues raised by the stakeholders
and our response thereto are given hereunder for compliance
by all concerned:-
| Sr.
No. |
ISSUES |
CLARIFICATIONS |
| 1. |
Are
debt swap facilities in respect of outstanding fixed
term loans against generators is available to entire
Spinning Sector? |
Debt
swap facilities against generators is available to
entire spinning sector under the LTF-EOP Scheme in
line with the stipulations made in above circular
letter as well as SMED Circular No. 19 dated 4th September,
2006. |
| 2. |
Are
loans which were originally obtained under FE-25 for
import of the machinery, and subsequently adjusted
through obtaining long term rupee financing from the
bank concerned, eligible for debt swap? |
The
banks can consider the requests of the borrowers for
debt swap against such loans provided the underlining
long term rupee loan has been disbursed for the eligible
machinery, imported against the FE-25 loan, during
the tenure prescribed for debt swap arrangements.
|
| 3. |
Can
a borrower transfer the debt from one bank to another
bank for the purpose of debt swap? |
Yes,
however only in case if a bank has limit in excess
of its requirement for disbursement of funding under
LTF-EOP Scheme to the fresh cases as also its debt
swap cases. The banks taking up the loans shall be
under obligation to inform the same to this department
forthwith besides ensuring that the process is completed
and cases are submitted to the offices of SBP BSC
(Bank) before 31-12-2006 as no extension in the same
will be allowed on the pretext that the Scheme allows
the bank/DFIs a two month period to process the case..
|
3.
It has come to our notice that some PFIs are recovering
additional charges for the debt swap, from their borrowers
to whom the facilities have already been extended by them,
on one or the other pretext to enhance their spread, which
has been viewed very seriously by the SBP. PFIs are, therefore,
advised to immediately stop this practice failing which
SBP will take punitive action against them.
4. 4. All other instructions on the subject shall remain
unchanged.
Please
acknowledge receipt.