Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular Letter No. 09 of 2020
May 08, 2020

The Presidents/CEOs,
All Banks/DFIs

Dear Sirs/Madams,

1. Temporary Economic Refinance Facility (TERF)
2. Islamic Temporary Economic Refinance Facility (ITERF)

Please refer to IH&SMEFD Circular Nos. 01 and 02 of 2020 dated March 17, 2020, whereby, State Bank of Pakistan’s refinance facilities on the captioned subjects were announced.

2. On the basis of feedback from stakeholders, State Bank has decided to expand the scope of subject Facilities. Accordingly, in addition to the new projects, existing projects/ businesses are being allowed to avail financing under these Facilities for undertaking Balancing, Modernization and Replacement (BMR) and/or expansion of their projects/ businesses. However, to ensure proper utilization of the Facilities, banks/ DFIs and borrowers are required to ensure the following:

  1. As per TERF’s/ITERF’s eligibility criteria, financing for BMR/expansion will only be available for purchase of new imported and locally manufactured plant & machinery against foreign LC and inland LC, respectively. Second-hand machinery, land or civil works are not covered under the Facilities.

  2. Banks/DFIs will be required to make disbursements to their customers on the basis of certificates of their Internal Audit confirming that financing is within the terms and conditions laid down in the Facilities. A copy of the said Internal Audit Certificate shall be submitted to the concerned office of SBP BSC (Bank) at the time of availing refinance for the first time for a project/ business while copies of certificates in respect of subsequent disbursements may be submitted at the time of availing last refinance for the same project/ business. In case of consortium finance the lead bank will be required to submit the certificate.

  3. The borrowers concerned will be required to submit a report from PBA’s approved surveyors (acceptable to bank/DFI concerned) with regard to confirmation that the newly purchased plant & machinery has been installed as per their initial request/proposal for BMR/expansion. In case of installation/fixation in part, this report will be required at first and final installation of the plant/equipment.

3. All other terms and conditions of the Facilities shall remain unchanged.


Yours sincerely,


(Dr. Mian Farooq Haq)


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