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SBP Export Refinance Scheme

Salient Features of EFS

Categorization of EFS:
A. EFS- Part-I
Transactions Oriented
B. EFS Part-II
Performance Oriented

Salient Features of EFS

Part-I ( Transactions oriented)

The commercial banks provide concessionary
finance to the exporters at Pre-shipment and/or
Post-shipment stage for export of eligible
commodities against individual Firm Export
Order/Contract or Irrevocable Letter of Credit.
The tenor of facility is up to 180 days with a roll
over option for further 90 days.
The exporter has to show export proceeds
equivalent to the loan amount as performance.

Salient Features of EFS

Part-II ( Performance oriented)

An amount equal to of the proceeds realized
during the previous year, is allocated on revolving
basis.
Performance of exporter is matched annually
against total loan availed on daily product basis.
The exporters are under obligation to realize export
proceeds equal to 2 times during the relevant
financial year except in case of leather garments
where the existing requirement of 2 times has been
reduced to 1.5 times.
The tenor of facility is also up to 180 days with a
roll over option for another 180 days showing at
least 70% shipments of loan availed initially.
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Salient Features of EFS

Fixation of EFS rates

Fixation of EFS Rates:
Till 2001, Markup rate under EFS was fixed on
monthly basis and was concessionary/subsidized.
After 2001, market oriented mechanism was
introduced/ adopted and mark up rate was linked
to 6 Months Treasury Bills (T-bills) average
weighted rate.
Since July 2006, the rate was imbued with subsidy
element.
Presently, rates have been re-linked with Monthly
TBs.
Average rate of 6 Months T-bill + spread
Development Finance Support
Department

Salient Features of EFS

Repricing of loans
Repricing of Loans:
If the new rate is higher than the previous rate
then the previous Lower rate will prevail/remain
effective.
If the new rate is lower than the previous rate
then loans will be re-priced at new Lower rate to
pass on the benefit of lower rate to the
exporters.

Development Finance Support

Department

Salient Features of EFS

Eligibility Criteria:

Under EFS all major value added commodities exported

from Pakistan are eligible for financing except those
mentioned in Negative List under the scheme. Therefore,
any exporter who meets the lending criteria of a bank can
avail financing for eligible commodities.
EFS
Facility
is
also
available
to
the
input
suppliers/manufacturers of the Direct Exporter, termed as
Indirect Exporter (IDE) on the basis of Standardized
Purchase Order (SPO) or the Inland Letter of Credit (ILC) to
be established by the Direct Exporter against the
particular Export Order/Contract/Letter of Credit. IDE will
be eligible to avail finance from banks against ILC or SPO,
to the extent of the amount mentioned therein.
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Operational Mechanism
Operational Mechanism

Limit Allocation to Commercial Banks by SBP

Borrowers evaluation by the Commercial bank
Disbursement to the eligible borrower by the
bank
Reimbursement to the bank by SBPBSC
Funds provider SBP
Intermediary Commercial Bank
Risk Taker Commercial Bank

Export Refinance Scheme- Operational Flow

Chart

Verificat
ion
Team
On-site Verification of
EFS cases

Export
er

Reques
t for
finance

Request
for Refinance

Grant of
finance
Reported
to the
President
of the
Bank

ABC
Bank

IH&S
MEF
D

Grant of
Refinance
within 48hrs.
or otherwise
Bank-wise
Consolidat
ed
Verificatio
n Reports

Compilatio
n of
Verificatio
n Report

SBP
BSC
SBP BSC
Office
Verificatio
n Reports

DFSD
SBP BSC
HOK

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Operational Mechanism

Sanction of Annual Limits

Sanction of Annual Limits under EFS
Revolving limits granted each year.
Linked to Monetary policy of Central Bank

Grant of limits by SBP to commercial banks for providing

finance to their clients (exporters):
Banks submit applications for allocation of limits each FY.
Entitlement is determined as multiple of equity of the
bank.
Banks composite rating is examined.
Previous years utilization of funds EFS is considered.
Reset upon banks request or due to economic conditions

Development Finance Support

Department

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Operational Mechanism

Sanction of Annual Limits

Sanction of Annual Limits

Stakeholders are: SBP; SBPBSC and Banks

IH&SMEFD handles issues of EFS and grants limits.
Limits allocation at various offices of SBP BSC
Transfers of limits from one office to another
Present criteria for limits Quarterly review
In order to avail revolving limits, banks are required
to submit the following documents:
- Agreement with SBP on Form A
- Demand Promissory Note.
- Region wise allocation request
Development Finance Support
Department

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Operational Mechanism
History of EFS rates:
Year

Rate of Refinance

Spread

Total

1973

4%

3%

7%

1977

7%

3%

10%

1994

10%

3%

13%

2001*

11.5%

1.5%

13%

2003*

1.5%

1.5%

3%

July 2006

6.5%

1.0%

7.5%

Oct 2010

8%

1.0%

9%

Jan 2011

10%

1.0%

11.0%

10th Sep 2012

8.5%

1.0%

9.5%

Development Finance Support

Department

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Operational Mechanism

Operational Mechanism
EFS- Part-I ( Transactions oriented)
1. Pre-Shipment
2. Post Shipment

Development Finance Support

Department

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Operational Mechanism

Pre-shipment Process
Pre-Shipment:
Exporter having received the Firm Export Order /
Letter of Credit approaches the commercial bank.
Commercial bank, if satisfied with the documents,
provides pre-shipment finance to the exporter to
manufacture the order.
Bank then approaches SBP BSC for the Refinance.

Development Finance Support

Department

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Operational Mechanism

Pre-shipment

Pre-Shipment:
Exporter after availing the finance has to:
1. Make the shipment within 180 days of
obtaining the finance.
2. Get the export proceeds realized within 210
days of date of shipment

Development Finance Support

Department

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Operational Mechanism

Documents for Pre-shipment:

Nature of
Facility
Pre-shipment

DE
1. Firm Exporter Order/LC/
Contract
2. Application/undertaking
on Form B
3. D.P. Note

Development Finance Support

Department

IE
1. Inland LC/Standard
Purchase Order (SPO)
2. Application/Undertaki
ng on Form - C

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Operational Mechanism

Post-Shipment - Process
Post Shipment:
Exporter having shipped the goods approaches
commercial bank for short term finance against its
shipment to bridge the gap between his immediate
financial needs and export proceeds realization.
Commercial bank, if satisfied with the documents,
provides Post-shipment finance to the exporter
against the shipment already made.
Bank then approaches SBP BSC for the Refinance.

Development Finance Support

Department

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Operational Mechanism

Post-shipment:
Exporter has already shipped the goods
Exporter has to get the proceeds realized
within 210 days of date of shipment

Development Finance Support

Department

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Thank You!
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