With
a view to encourage cotton ginners to modernize their
factories to produce quality ginned cotton for the textile
value chain as well as to meet the shortage of electricity,
it has been decided to provide financing facilities on
the following terms & conditions:-
2.
Eligibility Criteria:
i)
Financing shall be available only for Balancing, Modernization
and Replacement (BMR) of Cotton Ginning Factories.
ii) Cotton seeds crushing machinery installed in
the premises of ginning factories shall also be eligible
to avail financing facilities under the Scheme.
iii) Financing shall be available for purchase of only
new locally manufactured plant, machinery & equipment.
iv) Financing for purchase of new generators up-to a maximum
capacity of 500 KVA shall also be eligible. The capacity
of generator shall, however, not be in excess of the ginning
factory’s in-house energy requirements or upto 500
KVA whichever is less.
v) Only SME borrowers, as defined in Prudential
Regulations for SMEs, shall be eligible to avail financing
facilities under the Scheme.
vi) This Scheme shall be effective from the date of issuance
of this circular and shall remain valid only up to December
31, 2010 on first come first served basis and subject
to availability of funds under the Scheme.
3.
Period of Financing and Grace Period:
Financing
under the Scheme shall be available for a maximum period
of seven years including a maximum grace period of six
months.
4. Rates of Mark up:
i)
The rates of mark-up under the Scheme shall be as under:-
Tenor |
Rate
of Refinance |
Banks’
spread |
End
users’ rate |
Up-to
3 years |
6.00% |
2.00% |
8.00% |
Over
3 years and up-to 5 years |
6.50% |
2.50% |
9.00% |
Over
5 years and up-to 7 years |
7.00% |
3.00% |
10.00% |
ii)
Financing rates shall be revised on annual basis effective
from July each year.
iii) The rate of mark-up once fixed shall remain locked-in
for the entire duration of the loan, provided the borrowers
continue to repay all scheduled installments by the respective
due dates. Similarly, in cases where the loan amount is
not disbursed in full during the validity of an applicable
rate, the un disbursed amount shall attract the new rate
of finance/refinance applicable on the date of its disbursement
by the bank/DFI.
5.
Participants:
Financing
facilities under the Scheme shall be provided through
all commercial banks and Development Finance Institutions
(DFIs).
6.
Availability of Funds:
Financing
under the Scheme shall be provided by the banks/DFIs on
first come first served basis within the overall amount
earmarked for the purpose. While adequate funds have been
earmarked for the Scheme under reference, the banks/DFIs
shall, however, be required to approach SME Finance Department,
State Bank of Pakistan, before release of finances to
the borrowers for confirming the availability of funds.
State Bank will respond to the concerned bank/DFI within
three working days in this regard with a copy to the concerned
office of the SBP BSC (Bank) from where it will avail
refinance.
7.
Grant of Refinance:
i)
The State Bank shall provide refinance to each bank/DFI
on service charge (mark-up) basis in terms of Section
17 (2) (d) read with section 22 of State Bank of Pakistan
Act 1956.
ii) Refinance shall be allowed to the Banks/DFIs by the
concerned office(s) of SBP BSC (Bank) on submission of
documents as may be required by State Bank. The documents
initially required are attached herewith.
8.
Repayment of the loans:
i)
Principal amount of loans shall be repayable in equal
quarterly / half yearly installments after prescribed
grace period, if any. However, if a borrower repays the
loan amount or its installment, in part or in full, before
the due date(s), the banks/DFIs shall be under obligation
to repay the amount(s) so received within three working
days to the concerned office of SBP-BSC (Bank) failing
which fine for late adjustment of loan will be recovered
from the concerned bank/DFI, at the rate specified by
the State Bank.
ii) The refinance granted by SBP-BSC offices to the Banks/DFIs
shall be recovered on the due dates as reported in the
original repayment schedule from the account of the banks/DFIs
maintained with the respective office of the SBP BSC (Bank).
In case the borrowers fail to make repayment of the amount
of installment as per the original repayment schedule,
the bank/DFI will be entitled to charge normal rate of
mark up on such overdue principal amount besides taking
other actions to recover the same as are incidental to
such defaults. In no case the liability of banks/DFIs
to pay/repay to SBP BSC the principal amount of refinance,
or mark up or any other charges or penalty thereon shall
be dependent upon the recovery from the borrower nor shall
such liability be affected by any default on the part
of the borrower.
iii) Mark-up shall be paid on quarterly basis.
9.
Other Terms & Conditions:-
i)
Financing under the Scheme shall be subject to compliance
with the all rules and regulations including Prudential
Regulations for SMEs.
ii) Banks/DFIs shall not take more than six weeks in evaluating
an application for financing under the Scheme from the
date of receipt of complete information from the borrower.
Where the request is declined, the bank/DFI will explicitly
apprise the prospective borrower of the reasons for rejecting
the application.
iii) Financing banks/DFIs shall ensure fulfillment of
requisite pre-disbursement formalities by the borrower
through due diligence as per their own internal arrangements
to avoid malpractice and mis-utilization of funds under
the Scheme.
iv) Banks/DFIs shall consider financing based on the debt
to equity requirements as prescribed in Prudential Regulations
for SMEs. The financing bank/DFI may, however, ask for
higher contribution of equity from the borrowers keeping
in view individual risk profile.
v) Refinance shall be provided on the basis of certification
by the Internal Audit of the financing bank/DFI with regard
to confirmation that the loan is within the terms and
conditions laid down in the Scheme. A copy of the said
Internal Audit Certificate shall also be submitted to
the concerned office of SBP BSC at the time of availing
the refinance facility.
vi) Locally manufactured machinery using more than 80%
imported components shall not be eligible for financing
under the Scheme. However, the financing shall be limited
only to the extent of local components. This condition
shall not apply to purchase of generators.
vii) Second-hand machinery shall not be eligible under
the scheme.
viii) Financing under the Scheme shall be checked/verified
by our Banking Inspection Department (BID) during inspection
of the banks/DFIs to ensure that the same have been allowed
as per the terms and conditions of the Scheme.
ix) Financing shall not be available for the purpose of
acquisition of land, construction of building etc.
x) Financing shall be available to the extent of ex-factory/showroom
price of the new locally manufactured plant, machinery,
equipments & generators.
xi) Advance payment to the extent of 20% of the ex-factory
/showroom price can be made in terms of related underlying
agreement by securing the bank’s interest.
xii) Disbursements by banks/DFIs should not be made to
the borrower directly; instead payments shall be made
to the manufacturers / suppliers of the locally manufactured
machinery/generator.
xiii) Where a bank/DFI considers the requests of their
borrowers for rescheduling of loans granted under the
Scheme, the principal amount of refinance shall only be
rescheduled in a way that total tenor of refinancing under
the scheme does not exceed maximum period of 7 years from
the date of original disbursement made by the banks/DFIs.
Further, the borrower shall be liable to make payment
of mark-up at the rate applicable on the date of such
rescheduling, or the original rate whichever is higher.
i)
In case of violation of the terms & conditions of
the Scheme, the State Bank shall reserve the right to
recover the amount of refinance granted to the bank/DFI
along-with fine at the rate of Paisa 60 per day per Rs
1000/- or part thereof.
ii) In case, a borrower will make early repayment(s) of
the amount of loan/installment(s) and bank/DFI fails to
repay the same to concerned office of SBP-BSC within three
working days as mentioned in clause 8(i) above, late adjustment
fine will be charged from the concerned bank/DFI at the
rate of Paisa 60 per day per Rs 1,000 or part thereof
or prospectively at such rate as may be announced by the
State Bank from time to time.