January 23, 2009	Friday	Muharram 25, 1430

KARACHI, Jan 22: The State Bank announced on Thursday a Rs12 billion plan to help borrowers of the export financing scheme, deferring payment of their loans for one year.

However, the borrowers having non-performing loans would not be able to avail the facility.

Exporters have been demanding extension of payment, saying a slowdown in business activities and a liquidity crunch had put them in a difficult situation.

In a circular, the SBP said it had been decided to allow banks and development finance institutions (DFIs) to provide grace period to borrowers who have availed financing under the Long Term Financing for Export Oriented Projects (LTF-EOP), including Debt Swap Facility under LTF-EOP scheme and Long Term Financing Facility (LTFF) scheme.

The borrowers, who have already repaid LTF-EOP or LTFF loans, will not be eligible for reimbursement. Similarly, in case a loan is not payable during 2009 as per its original schedule, it will not qualify for the benefit under these arrangements.

“Only loans outstanding as of Dec 31, 2008, will qualify for the benefit of grace period. As such, the loans disbursed on or after Jan 1, 2009, will not qualify for the benefit,” said the circular.

Banking sources said that the exporters would get an accumulated facility of around Rs12 billion under the scheme.

This is a one-time facility effective from the date of issuance of the circular and will remain valid only up to March 31. “Any request received after March 31 will not be considered by banks or DFIs,” said the SBP.

Banks and DFIs may provide deferment of one year in repayment of the principal outstanding under the above schemes as of Dec 31, 2008. Under this facility repayment dates for all installments of principal amounts falling due between Jan 1 and Dec 31, 2009, may be re-fixed after a passage of one year from the due date. “For this purpose, banks or DFIs will carry out their due diligence of the individual borrowers on case-to-case basis.”

No benefit under the circular should be given to the borrowers having non-performing loans, classified under SBP prudential regulations.

In case a loan has already been rescheduled by a bank or DFI as per its policy or in case a borrower has defaulted on loans, such cases would not be eligible for the benefit under these instructions.

The borrowers, who have already repaid LTF-EOP/LTFF loans, will not be eligible for reimbursement.

Similarly, in case a loan is not payable during 2009 as per its original repayment schedule, it will not qualify for the benefit under these arrangements.

“Only loans outstanding as of Dec 31, 2008, will qualify for the benefit of grace period. As such, the loans disbursed on or after Jan 1, 2009, will not qualify for the said benefit,” said the circular.

The banks and DFIs will keep on record the basis for grant of said benefit to the borrowers concerned, which will be checked by the Banking Inspection Department during inspection of banks and DFIs to ensure that this has been allowed as per laid-down criteria.

Banks and DFIs will take into account the track record, conduct of account, underlying collateral, financial condition and future outlook, volume of exports and overall risk profile of the borrowers in evaluating their requests.