SBP expands export finance facility to encourage timely inflows

SBP expands export finance facility to encourage timely inflows

SBP expands export finance facility to encourage timely inflows
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KARACHI: The State Bank of Pakistan (SBP) on Wednesday enhanced the scope of the Export Finance Scheme (EFS) to facilitate exporters and encourage timely inflow of foreign exchange, a statement said.

The central bank enhanced the scope of EFS of both conventional as well as Sharia based, allowing the exporters to obtain financing against their export proceeds through discounting of export bills and receivables, it added.

The discounting of bills and receivables is essentially a financial transaction where the exporter surrenders its future export proceeds and obtains financing in rupees for the remainder of the time period of exports proceeds realisation.

This initiative will help exporters meet their working capital needs and also incentivise them to bring in their export proceeds in a timely manner that will help in improving foreign exchange inflows in the interbank market.

Exporters can obtain financing from banks by discounting their export bills and receivables (both post-shipment and pre-shipment) under this scheme, at rates ranging from 2 per cent to 3 per cent depending upon the tenure of discounting.

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In the first three months, this facility will be available at introductory lower rates of 1 per cent and 2 per cent. Banks will obtain refinance equal to discounted amount for the tenure of discount at tier-based rates ranging from 1 per cent to 2 per cent.

In addition to supportive rates for working capital needs of exporters, the SBP has also provided special relaxation under this facility by increasing the export proceeds realisation period up to 180 days if the exporter avails this discounting facility.

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