Cheaper finance for upgrading ginning units - Printable Version +- Pakistan Real Estate Times - Pakistan Property News (https://www.pakrealestatetimes.com) +-- Forum: Pakistan Real Estate / Property News (/forumdisplay.php?fid=1) +--- Forum: Latest Pakistan Property & Economic News (/forumdisplay.php?fid=4) +--- Thread: Cheaper finance for upgrading ginning units (/showthread.php?tid=7240)

Cheaper finance for upgrading ginning units - LRE - 09-05-2009 10:20 PM By Shahid Iqbal Saturday, 05 Sep, 2009 | 05:11 AM PST | New scheme State Bank scheme will provide easier credit to SME cotton units buying local plants and equipment. — Photo by APP/File KARACHI: The State Bank will provide financing at a cheaper rate for modernising of cotton ginning factories, cotton seed crushing machines and for purchase of generators to meet the shortage of electricity. The SBP announced the new financing scheme on Friday with a view to encourage the ginners to upgrade their factories for production of quality ginned cotton for the textile industry. Cheap financing will also be available to meet the shortage of electricity for which a generator of up to maximum capacity of 500kv could be bought with the borrowed money. The SBP said the financing will be available only for balancing, modernisation and replacement (BMR) of ginning factories while financing for cotton seeds crushing machinery will also be available. However, the SBP made it mandatory that the financing will be available only to new locally manufactured plant, machinery and equipment. The SBP made it clear that only SME borrowers, as defined in Prudential Regulations, will be eligible to avail financing facilities under the scheme. ‘This scheme will be effective from the date of issuance of this circular and will remain valid only up to Dec 31, 2010 on first-come-first-served basis and subject to availability of funds under the scheme,’ said the SBP circular issued on Friday. According to the circular the financing under the scheme will be available for a maximum period of seven years, including a maximum grace period of six months. The SBP fixed the rate of interest at eight per cent for three years, nine per cent for five years and 10 per cent for seven years. The maximum loan period is seven years. The rate of mark-up once fixed will remain locked for the entire duration of the loan, provided the borrowers continue to repay all scheduled instalments by the respective due dates. Similarly, in cases where the loan amount is not disbursed in full during the validity of an applicable rate, the undisbursed amount will attract the new rate of finance or refinance applicable on the date of its disbursement by the bank or DFI. Financing facilities under the scheme will be provided through all commercial banks and DFIs. While adequate funds have been earmarked for the scheme, the banks and DFIs will, however, be required to approach the SBP Finance Department before release of finances to the borrowers for confirming the availability of funds. State Bank will respond to the concerned bank and DFI within three working days in this regard with a copy to the concerned office of the SBP BSC (bank) from where it will avail refinance. The SBP said the banks and DFIs will not take more than six weeks in evaluating an application for financing under the scheme from the date of receipt of complete information from the borrower. Refinance will be provided on the basis of certification by the Internal Audit of the financing bank or DFI with regard to confirmation that the loan is within the terms and conditions laid down in the scheme. The SBP further elaborates the scheme by saying that the locally manufactured machinery using more than 80 per cent imported components will not be eligible for financing under the scheme. However, the financing will be limited only to the extent of local components. ‘This condition shall not apply to purchase of generators,’ said the SBP adding that the second-hand machinery will not be eligible under the scheme. Financing shall not be available for the purpose of acquisition of land, or construction of buildings. http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/news/business/09-cheaper-finance-for-upgrading-ginning-units---szh-04