Financing for export projects increased

Borrowing limit for plant and machinery enhanced from Rs1bn to Rs5bn.

KARACHI: The State Bank of Pakistan has increased maximum financing limit for an export-oriented project under the Long-Term Financing Facility (LTFF) scheme for plant and machinery from Rs1 billion to Rs1.5 billion.

In a circular issued on Monday, SBP said banks and development finance institutions (DFIs) may continue to provide financing facilities as per their credit policies over and above the maximum limit from their own sources subject to compliance with prudential regulations.

In another circular, SBP said that banks and DFIs can entertain financing requests of a new project or expansion and balancing, modernisation and replacement (BMR) of existing projects on the basis of projected exports.

The borrower will have to meet minimum export target - $5 million or 50 per cent of sales whichever is lower - within a maximum period of four years, from the date of grant of refinance from the central bank in a phased manner. In the first phase, 40 per cent of the export target will be met in the first two years while the remaining 60 per cent target will be met in the next two years or total period of loan, whichever is less.

Published in The Express Tribune, February 15^th, 2011.