Mark up rate support for textile sector against long term loans
Effective September 1, 2009 the Government of Pakistan has announced a Mark up Rate Support for Textile Sector on their outstanding running balances of principal amount of floating rate loans availed by the industry from commercial banks/DFIs for financing import / purchase of textile machinery vide Notification No. 3(3)TID/09-P-I dated 1st September 2009 of Ministry of Textile Industry (MINTEX).
2. Pursuant to the release of budgetary allocation by the Ministry of Finance for payment of above Support for six months ending on 28th February, 2010, following procedure has been devised in consultation with Ministry of Textile Industry, for payment of Mark up Rate Support for Textile Sector to the eligible borrowers of Textile Sector:-
(i) Maximum Support will be admissible to the extent of 5% p.a. or the difference in mark-up rate between floating rate loan and LTFF rate, whichever is lower.
(ii) The amount of Support shall be paid by the commercial banks/DFIs to the eligible borrowers at their respective branches, provided the borrowers have on-line Registration Certificate issued by Ministry of Textile Industry during the validity of the same.
(iii) The Support shall be admissible on the principal amount of loans outstanding on reducing balance on daily product basis.
(iv) The loans disbursed by the banks/DFIs up-to August 31, 2009 shall qualify for the facility.
(v) The Support shall be admissible against long term loans extended for import / local purchase of textile machinery only against import/inland letter of credit (LC).
(vi) The outstanding loans in respect of locally manufactured and imported machinery for which borrowers have availed financing facilities under SBP's Long Term Financing Facility (LTFF) will not be eligible for this facility.
(vii) No Support shall be admissible on the amount of loan disbursed for meeting import incidentals. The Support shall be admissible only on the outstanding principal amount of loans availed on the C&F value of the imported machinery and / or ex-factory /show room price of locally manufactured machinery.
(viii) This facility will be administered by the commercial banks/DFIs.
(ix) Amount of Support shall be paid by commercial banks/DFIs on six monthly basis in March and September each year subject to release of necessary budgetary allocation by the Federal Government for relevant fiscal year.
(x) Accordingly, Support for six months ending on 28th February 2010 (from 01-09-2009 to 28-02-2010) shall be from the date of issuance of this circular up-to April 23, 2010. However, final dates for payment of Support in the next period shall be announced separately on receipt of budgetary allocations from Government of Pakistan for the respective periods.
(xi) For the calculation of Support payable in the month of March-April 2010, the amount outstanding as on 31st August 2009 shall be used as base figure and amount of Support shall be calculated on reducing balance basis for all scheduled repayments by the borrowers during six months period.