KARACHI, Sept 4: The State Bank on Monday allowed a one-time opportunity to the textile sector to refinance its outstanding fixed term loans availed from banks or DFIs for import of plant and machinery.

This was announced through a circular issued by the SBP. It said that in order to facilitate the export-oriented industry to overcome the prevailing crises and remain competitive in the world market, it had been decided to allow a one-time opportunity to the textile sector to refinance its outstanding fixed term loans availed from banks or DFIs for import of plant and machinery with loans under the SBP scheme.

The facility will be provided under the `refinance of long-term loans’ extended to the textile sector for the import of plants and machinery for export purposes.

Only those fixed term loans of the textile sector will be eligible for refinance, under the LTF-EOP Scheme, which have been obtained on or after January 1, 2003. No loan disbursed prior to Jan 1, 2003 will be refinanced under the scheme.

The textile sector will not include spinning units. However, only six processes/sub-sectors of the spinning sector vis-à-vis doubling, twisting, combing, slubbing, lycra and yarn dyeing exclusively will be eligible.

The outstanding principal amount on the date of granting of refinance shall be eligible for refinance under the LTF-EOP Scheme at the mark-up rate prevailing at the time of availing refinance from the SBP BSC offices. The rate of mark-up (revised rate of mark-up) will be applicable prospectively and not with retrospective effect i.e. from the date of availing of refinance under the scheme.

The refinance so provided under the scheme will be subject to the terms and conditions laid down in the scheme.

Refinance to banks or DFIs will be provided only to the extent of outstanding principal amount at the time of grant of refinance on the basis of certification by bank’s or DFI’s internal audit with regard to outstanding principal and confirmation that the refinanced loan is within the terms and conditions laid down in the SBP LTF-EOP Scheme.

No refinance will be allowed to non-performing loans (NPLs) classified under SBP Prudential Regulations. The banks or DFIs will adhere to the repayment schedule already agreed at the time of sanction or disbursement of the original loan. The banks or DFIs may, however, at their sole discretion consider any rescheduling/restructuring as per their own credit policies, but in such case, the repayment period of loans shall not exceed seven-and-a-half years from the date of first disbursement made by the banks/DFIs under the original loan.

Refinance facility under above arrangements shall be a one-time opportunity effective from the date of issuance of the circular,” said the SBP.