The
Presidents/ CEOs,
All Banks/DFIs.
Dear
Sirs / Madam,
Mark
up Rate Subsidy for Spinning Sector Eligibility Criteria
and Related Instructions for the Facility
Effective
July 1, 2007 the Government has announced a Mark-up rate
subsidy of 3% to spinning mills on their outstanding running
balances of principal amount of floating rate loans availed
by the industry from commercial banks/DFIs for financing
of import of spinning machinery vide SRO No. 973(I)/2007
dated 6th September, 2007. This facility will be administered
by the commercial banks/DFIs that will effectively lower
mark up rate by 3% on the outstanding balance of advances
granted to spinners for the period of subsidy.
2.
In pursuance with the government’s announcement the
State Bank of Pakistan has formulated the Mark-up Rate Subsidy
Scheme for spinning sector, the salient features of which
are as under:-
(i)
The subsidy shall be admissible on the principal amount
of loans outstanding on reducing balance basis during each
six monthly period ending on 31st December 2007 and 30th
June 2008.
(ii) The loans disbursed by the banks/DFIs during the period
1st July 2003 to 30th June 2007 shall qualify for the facility.
The usance LCs which have been established during this period
for import of plant & machinery, shall also qualify
for above subsidy provided these LCs are retired during
twelve months period admissible for payment of subsidy,
in terms of instructions contained in this circular.
(iii) The subsidy shall be admissible against long term
loans extended for import of spinning mill machinery excluding
the machinery used in the six sub sector / processes of
the spinning (doubling, twisting, slubbing, combing, lycra
and yarn dyeing).
(iv) The outstanding loans in respect of imported machinery
including six processes of spinning sector for which borrowers
have availed State Bank’s Debt Swap facility are not
eligible for this subsidy.
(v) No subsidy shall be admissible on the amount of loan
disbursed for meeting import incidentals. The subsidy shall
be admissible only on the outstanding principal amount of
loans availed on the C&F value of the imported spinning
machinery excluding the machinery for six sub sector/process
mentioned in (iii) above.
(vi) Amount of subsidy shall be paid by commercial banks/DFIs
on six monthly basis in January 2008 and July 2008.
(vii) For the calculation of subsidy payable in the months
of January 2008 and July 2008, the amount outstanding as
on 31st December 2007 and 30th June 2008 respectively shall
be used as base figure and amount of subsidy shall be calculated
on reducing balance basis for all scheduled repayments by
the borrowers during each six monthly period. The subsidy
shall be admissible only for one year.
(viii) Any rescheduling after 1-7-2007 or in case of default
by the borrowers on any installments would make them ineligible
to claim subsidy for the six monthly period involved and
subsequent period.
(ix) The subsidy amount shall be paid by the commercial
banks/DFIs to the eligible borrowers on six monthly basis
at their respective branches.
(x) The payment of subsidy by SBP to the banks/DFIs shall
be made by debit to the appropriate government account as
intimated to the State Bank by Finance Division.
3. Once the subsidy payment is made by banks/DFIs as per
Para 2 (ix) above the disbursing branch of banks/DFIs shall
seek reimbursement of the 3% Mark-up rate subsidy per transaction
from the concerned offices of the SBP-BSC as per these guidelines
and on submission of application as per the format attached
to this circular. Applications duly completed in all respects
received in the concerned offices of SBP-BSC on or before
1.30 pm shall be processed within 24 hours and subsidy shall
be provided to the bank through credit to their account
maintained with the concerned office of SBP-BSC. Processing
of application shall be subject to the condition that documents
as mentioned in Application Form for claiming of subsidy
have been enclosed with the applications, which shall be
subject to subsequent detailed scrutiny. In case SBP or
its authorized representatives subsequently conclude that
the subsidy payment was availed on the basis of incomplete
/ incorrect information, or that the same was claimed wrongfully,
the amount of subsidy so paid shall be recovered by debit
to the account of the bank concerned. However on removing
the irregularities to the satisfaction of the concerned
office the subsidy shall be reinstated. However no benefit
whatsoever shall accrue to the bank or the borrower for
the period, the subsidy was discontinued. In case the disbursing
banks/DFIs fails to remove the objection raised by SBP or
its representatives within 30 days the case will be treated
as closed. No subsidy claim whether on this count or on
account of a new application shall be entertained after
31st January 2008 and 31st July, 2008 for respective six
monthly periods. Banks/DFIs are, therefore, advised to ensure
that all eligible cases are submitted by their concerned
branches to the respective offices of SBP BSC (Bank) as
per schedule.
4. State Bank shall not accept liability of whatsoever nature
where a bank/DFI has failed to submit its request for payment
of subsidy within the validity of the Scheme, regardless
of the fact that delay in submission of fresh request or
re-submission of request for payment of subsidy pursuant
to action taken in terms of Para 3 above was on account
of the inability of the bank or the beneficiary of the subsidy
i.e. borrower.
5.
Banks / DFIs are advised to properly and promptly circulate
these instructions to their branches and constituents for
meticulous compliance.
Please acknowledge receipt.
Encl:
As above
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