SBP devises procedure for mark-up rate differential payment
KARACHI:
The State Bank of Pakistan (SBP) has devised a procedure for payment of mark-up rate differential to borrowers of Khyber-Pakhtunkhwa, Federally Administered Tribal Areas (Fata) and Provincially Administered Tribal Areas (Pata) in line with a fiscal relief package, announced by the prime minister, to rehabilitate economic life in these areas.
According to a circular issued on Thursday, effective from January 1, 2010, banks, development financial institutions (DFIs) and microfinance banks (MFBs) will charge mark-up on all business loans (corporate, small and medium enterprises, agriculture and microfinance) outstanding as on December 31, 2009 from the borrowers of Khyber-Pakhtunkhwa, Fata and Pata at 7.5 per cent per annum or six-month Kibor (Karachi Inter-bank Offered Rate), whichever is lower, for next two years up to December 31, 2011, except for loans extended to cigarette, textile, cement, sugar and beverage sectors.
It, however, said that loans disbursed on or after January 1, 2010 will not qualify for the relief but loans rolled over and renewed after that date, to the extent of outstanding balance as of December 31, 2009, will qualify for the subsidy.
Moreover, loans having fixed mark-up equivalent to or less than 7.5 per cent per annum will not qualify for the subsidy. Similarly, no subsidy will be applicable, if at any stage the six-month Kibor is determined equivalent to or less than the said rate.
With regard to reimbursement of the subsidy, the SBP said, the mark-up rate differential will be reimbursed to banks, DFIs and MFBs on six monthly basis in January and July each year subject to release of necessary budgetary allocation by the federal government for the relevant fiscal year.
The amount of subsidy payable in July 2010 shall be calculated on the basis of amount outstanding as on December 31, 2009 on reducing balance basis for all scheduled repayments by the borrowers during six months, on daily product basis.
However, dates for payment of support in upcoming periods will be announced separately on receipt of budgetary allocations from the government, it added.
According to the circular, in case a borrower had transferred its debt from one bank to another, then the cost of mark-up rate differential will be borne proportionately by both the banks, however, final claim will be submitted by the later bank and both banks shall proportionately share subsidy to be received from SBP-BSC.
However, concerned banks, DFIs and MFBs should ensure that the facilities are not availed in duplication, it added.
Eligible amount of subsidy will be reimbursed to the bank, DFI and MFB through credit to their account maintained with the office of SBP-BSC (Bank), Peshawar.
It said the amount reimbursed by SBP-BSC (Bank) will be subject to on-site inspection and if any claims were found ineligible, the amount will be refunded by banks, DFIs and MFBs along with prescribed fine.
The circular advised banks that no claim for the six months ended June 30, 2010 will be entertained after July 31 and asked them to ensure that all eligible cases are submitted as per schedule.
Published in The Express Tribune, July 2nd, 2010.
The State Bank of Pakistan (SBP) has devised a procedure for payment of mark-up rate differential to borrowers of Khyber-Pakhtunkhwa, Federally Administered Tribal Areas (Fata) and Provincially Administered Tribal Areas (Pata) in line with a fiscal relief package, announced by the prime minister, to rehabilitate economic life in these areas.
According to a circular issued on Thursday, effective from January 1, 2010, banks, development financial institutions (DFIs) and microfinance banks (MFBs) will charge mark-up on all business loans (corporate, small and medium enterprises, agriculture and microfinance) outstanding as on December 31, 2009 from the borrowers of Khyber-Pakhtunkhwa, Fata and Pata at 7.5 per cent per annum or six-month Kibor (Karachi Inter-bank Offered Rate), whichever is lower, for next two years up to December 31, 2011, except for loans extended to cigarette, textile, cement, sugar and beverage sectors.
It, however, said that loans disbursed on or after January 1, 2010 will not qualify for the relief but loans rolled over and renewed after that date, to the extent of outstanding balance as of December 31, 2009, will qualify for the subsidy.
Moreover, loans having fixed mark-up equivalent to or less than 7.5 per cent per annum will not qualify for the subsidy. Similarly, no subsidy will be applicable, if at any stage the six-month Kibor is determined equivalent to or less than the said rate.
With regard to reimbursement of the subsidy, the SBP said, the mark-up rate differential will be reimbursed to banks, DFIs and MFBs on six monthly basis in January and July each year subject to release of necessary budgetary allocation by the federal government for the relevant fiscal year.
The amount of subsidy payable in July 2010 shall be calculated on the basis of amount outstanding as on December 31, 2009 on reducing balance basis for all scheduled repayments by the borrowers during six months, on daily product basis.
However, dates for payment of support in upcoming periods will be announced separately on receipt of budgetary allocations from the government, it added.
According to the circular, in case a borrower had transferred its debt from one bank to another, then the cost of mark-up rate differential will be borne proportionately by both the banks, however, final claim will be submitted by the later bank and both banks shall proportionately share subsidy to be received from SBP-BSC.
However, concerned banks, DFIs and MFBs should ensure that the facilities are not availed in duplication, it added.
Eligible amount of subsidy will be reimbursed to the bank, DFI and MFB through credit to their account maintained with the office of SBP-BSC (Bank), Peshawar.
It said the amount reimbursed by SBP-BSC (Bank) will be subject to on-site inspection and if any claims were found ineligible, the amount will be refunded by banks, DFIs and MFBs along with prescribed fine.
The circular advised banks that no claim for the six months ended June 30, 2010 will be entertained after July 31 and asked them to ensure that all eligible cases are submitted as per schedule.
Published in The Express Tribune, July 2nd, 2010.