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- Export Refinance Loan Scheme
Export Refinance Loan Scheme
- By Of Pakistan
- Published 08/20/2009
- Refinance Loan
- Unrated
13.2.1 It has generally been felt that the Indirect Exporters (IDEs), specially SMEs, supplying inputs to the exporters for
executing export orders do not have access to adequate financing facilities from the financial/ formal sector. Even in
cases where IDEs obtain financing from banks, they do not obtain the same in line with the rates on EFS facilities
available to the direct exporters. Thus, the cost of financing facilities used by the IDEs is relatively high, which is
reflected in the cost of input supplied by them, this in turn adds to the non-competitiveness of our exports. Thus, it is
imperative that the Indirect Exporters also get financing from banks at rates equivalent to EFS rates, so that they are
able to provide inputs to the DE at competitive rates.
13.2.2 Entitlement to avail EFS: Efforts have been made to bring these IDEs within the ambit of the Export Finance
Scheme. Each IDE will become entitled to avail financing facilities under the Export Finance Scheme on fulfilling the
following requirements:
The DE shall place the order to the IDE using the Standardised Purchase Order (SPO) as per the format
attached herewith at Annexure 10.;
The financing bank of the IDE will be required to satisfy itself as to the abilities of the IDE to supply the
materials/inputs to the DE;
The DE as also IDE shall be required to execute a tripartite agreement with the financing bank of the
IDE for assignment of receivable of the IDE from the DE to the financing bank of the IDE. In this tripartite agreement the
DE, among other things, shall undertake to make payments of the goods received from the IDE directly to the bank of
the IDE and that DE shall not cancel the order placed on to the IDE without informing the financing bank of the IDE.
13.2.3 For availing EFS, the IDE, as proof of order shall submit to his financing bank the SPO issued by the DE. Each
DE shall be under obligation to send a copy of SPO to its financing bank, who will maintain a record of the same to
ensure the ceiling prescribed in Para ‘13.2.3’ below is not breached. The SPO issued under EFS shall not be used for
claiming any other financial benefit by the DE or the IDE.
13.2.4 The total quantum
of the SPO issued by the DE to a single IDE shall not be more than 25% of his total exports
realized during the previous year, whichever is less; as verified under Part-A of the Scheme11 .
13.2.5 The period of financing to the IDE shall not be in excess of 120 days or the supply date which ever is earlier.
13.2.6 Frequent cancellation of orders placed on IDE(s) by the DE without sound justification shall impair the abilities of
the DE to borrow funds under EFS.
13.2.7 There will be no facility of substitution, and in case the IDE is unable to deliver the goods as per the terms of the
SPO, fine for non delivery/ supply at the rate mentioned in Para 6.1.10 above, shall be recovered from the financing
bank of the IDE who will be entitled to recover it from the IDE. Where the goods/inputs have been supplied after a delay
the IDE shall be liable to pay fine for late delivery in accordance with the scale of fines as mentioned in Para 6.1.1
above. In such a situation the IDE shall be entitled to an automatic refund of fine charged on account of non-delivery by
the concerned office of the SBP (BSC) Bank provided the fine for late delivery does not exceed the fine for nondelivery.
However, in cases where fine for non-delivery exceeds the fine for late delivery additional fine shall not be
recovered.
13.2.8 The financing to the IDE under the EFS shall not be in excess of the 80% of the amount of SPO.
13.2.9 The office of SBP BSC (Bank) will recover the fine for non-delivery in case the documentary evidence regarding
the delivery of goods has not been furnished to them through the bank of the IDE in a period of 20 days from the due
date of the refinance or the due date of delivery mentioned in the SPO, whichever is applicable. As the financing for the
IDE is pre-shipment in nature, it is expected that the delivery date shall be commensurate to the period of financing.
11 For the first year of operations this will be worked out on the basis of the most recent EE Statements, verified by the
concerned FEOD. The claim of the DE in this regard shall be subject to verification by the External Auditor of the DE in case of corporate entity and by the Authorized representative of the financing bank of the DE in case the DE is a sole proprietor or partnership company. The financing banks of DE and IDE shall be under obligation to coordinate with each other in this behalf.
executing export orders do not have access to adequate financing facilities from the financial/ formal sector. Even in
cases where IDEs obtain financing from banks, they do not obtain the same in line with the rates on EFS facilities
available to the direct exporters. Thus, the cost of financing facilities used by the IDEs is relatively high, which is
reflected in the cost of input supplied by them, this in turn adds to the non-competitiveness of our exports. Thus, it is
imperative that the Indirect Exporters also get financing from banks at rates equivalent to EFS rates, so that they are
able to provide inputs to the DE at competitive rates.
13.2.2 Entitlement to avail EFS: Efforts have been made to bring these IDEs within the ambit of the Export Finance
Scheme. Each IDE will become entitled to avail financing facilities under the Export Finance Scheme on fulfilling the
following requirements:
The DE shall place the order to the IDE using the Standardised Purchase Order (SPO) as per the format
attached herewith at Annexure 10.;
The financing bank of the IDE will be required to satisfy itself as to the abilities of the IDE to supply the
materials/inputs to the DE;
The DE as also IDE shall be required to execute a tripartite agreement with the financing bank of the
IDE for assignment of receivable of the IDE from the DE to the financing bank of the IDE. In this tripartite agreement the
DE, among other things, shall undertake to make payments of the goods received from the IDE directly to the bank of
the IDE and that DE shall not cancel the order placed on to the IDE without informing the financing bank of the IDE.
13.2.3 For availing EFS, the IDE, as proof of order shall submit to his financing bank the SPO issued by the DE. Each
DE shall be under obligation to send a copy of SPO to its financing bank, who will maintain a record of the same to
ensure the ceiling prescribed in Para ‘13.2.3’ below is not breached. The SPO issued under EFS shall not be used for
claiming any other financial benefit by the DE or the IDE.
13.2.4 The total quantum
realized during the previous year, whichever is less; as verified under Part-A of the Scheme11 .
13.2.5 The period of financing to the IDE shall not be in excess of 120 days or the supply date which ever is earlier.
13.2.6 Frequent cancellation of orders placed on IDE(s) by the DE without sound justification shall impair the abilities of
the DE to borrow funds under EFS.
13.2.7 There will be no facility of substitution, and in case the IDE is unable to deliver the goods as per the terms of the
SPO, fine for non delivery/ supply at the rate mentioned in Para 6.1.10 above, shall be recovered from the financing
bank of the IDE who will be entitled to recover it from the IDE. Where the goods/inputs have been supplied after a delay
the IDE shall be liable to pay fine for late delivery in accordance with the scale of fines as mentioned in Para 6.1.1
above. In such a situation the IDE shall be entitled to an automatic refund of fine charged on account of non-delivery by
the concerned office of the SBP (BSC) Bank provided the fine for late delivery does not exceed the fine for nondelivery.
However, in cases where fine for non-delivery exceeds the fine for late delivery additional fine shall not be
recovered.
13.2.8 The financing to the IDE under the EFS shall not be in excess of the 80% of the amount of SPO.
13.2.9 The office of SBP BSC (Bank) will recover the fine for non-delivery in case the documentary evidence regarding
the delivery of goods has not been furnished to them through the bank of the IDE in a period of 20 days from the due
date of the refinance or the due date of delivery mentioned in the SPO, whichever is applicable. As the financing for the
IDE is pre-shipment in nature, it is expected that the delivery date shall be commensurate to the period of financing.
11 For the first year of operations this will be worked out on the basis of the most recent EE Statements, verified by the
concerned FEOD. The claim of the DE in this regard shall be subject to verification by the External Auditor of the DE in case of corporate entity and by the Authorized representative of the financing bank of the DE in case the DE is a sole proprietor or partnership company. The financing banks of DE and IDE shall be under obligation to coordinate with each other in this behalf.
