Refinancing Facility for Modernization of Small and Medium Enterprises (SMEs)
1. Scope and Eligibility Criteria:
i) Financing shall be available to wide range of SME Clusters / Sectors.
ii) Only SME borrowers, with number of employees up to 250 and sales turn-over up
to Rs 800 million shall be eligible to avail financing facilities under the Scheme.
iii) Financing shall be available for purchase of new imported/local plant & machinery
for BMR of existing units and setting up of new SME units.
iv) Financing shall be available for import/ local purchase of new generators up to a
maximum capacity of 500 KVA under the Scheme. The capacity of generator shall,
however, not be in excess of SME Unit’s in-house energy requirements or up-to
500 KVA, whichever is less.
v) Financing shall also be available for carrying out civil works up-to 20% of total
project cost for conversion of conventional brick kiln and up-to 50% of total project
cost for establishment of new zigzag technology based brick kiln.
2. Period of Financing and Grace Period:
Financing under the Scheme shall be available for a maximum period of ten years
including a maximum grace period of six months.
3. Participants:
Financing facilities under the Scheme shall be provided through all commercial banks and
Development Finance Institutions (DFIs).
4. Banks/DFIs-Wise Refinance Limits:
Applications for sanction of limits shall be sent by the interested banks/DFIs to the
Director, Infrastructure, Housing & SME Finance Department.
5. Rates of Service Charges / Mark-up:
a) Financing is available to end users at mark-up rate of up-to 6% p.a.
b) The rate of mark-up once fixed shall remain locked-in for the entire duration of
the loan, provided the borrowers continue to repay all scheduled installments by
the respective due dates.
6. Grant of Refinance:
i) The State Bank shall provide refinance to each bank/DFI on service charges (mark-
up) basis in terms of Section 17 (2) (d) read with section 22 of State Bank of
Pakistan Act 1956.
ii) Refinance shall be allowed to the Banks/DFIs by the concerned office(s) of SBP BSC
(Bank) on submission of documents as may be required by State Bank. The
documents initially required are available at following link of SBP’s Website:
[Link]
7. Repayment of the loans:
i) Principal amount of loans shall be repayable in equal quarterly / half yearly
installments after prescribed grace period, if any. However, if a borrower repays
the loan amount or its installment, in part or in full, before the due date(s), the
banks/DFIs shall be under obligation to repay the amount(s) so received within
three working days to the concerned office of SBP-BSC (Bank) failing which fine for
late adjustment of loan will be recovered from the concerned bank/DFI, at the rate
specified by the State Bank.
ii) The refinance granted by SBP-BSC offices to the Banks/DFIs shall be recovered on
the due dates as reported in the original repayment schedule from the account of
the banks/DFIs maintained with the respective office of the SBP BSC (Bank). In case
the borrowers fail to make repayment of the amount of installment as per the
original repayment schedule, the bank/DFI will be entitled to charge normal rate
of mark up on such overdue principal amount besides taking other actions to
recover the same as are incidental to such defaults. In no case the liability of
banks/DFIs to pay/repay to SBP BSC the principal amount of refinance, or mark up
or any other charges or penalty thereon shall be dependent upon the recovery
from the borrower nor shall such liability be affected by any default on the part of
the borrower.
iii) Mark-up shall be paid on quarterly basis.
8. Other Terms & Conditions:-
i) Financing under the Scheme shall be subject to compliance with all rules and
regulations including Prudential Regulations for SMEs.
ii) Banks/DFIs shall not take more than 15 working days for SE and 25 working days
in case of ME in evaluating an application for financing under the Scheme from the
date of receipt of complete information from the borrower. Where the request is
declined, the bank/DFI will explicitly apprise the prospective borrower of the
reasons for rejecting the application.
iii) Financing banks/DFIs shall ensure fulfillment of requisite pre-disbursement
formalities by the borrower through due diligence as per their own internal
arrangements to avoid malpractice and mis-utilization of funds under the Scheme.
iv) Financing under the scheme shall be available only against LCs in case of financing
against imported plant and machinery.
v) Banks/DFIs shall consider financing based on the debt to equity requirements as
prescribed in Prudential Regulations for SMEs. The financing bank/DFI may,
however, ask for higher contribution of equity from the borrowers keeping in view
individual risk profile.
vi) Refinance shall be provided on the basis of certification by the Internal Audit of
the financing bank/DFI with regard to confirmation that the loan is within the
terms and conditions laid down in the Scheme. A copy of the said Internal Audit
Certificate shall also be submitted to the concerned office of SBP BSC at the time
of availing the refinance facility.
vii) Second-hand machinery shall not be eligible under the scheme.
viii) Financing under the Scheme shall be checked/verified by our Banking Inspection
Department (BID) during inspection of the banks/DFIs to ensure that the same
have been allowed as per the terms and conditions of the Scheme.
ix) Financing shall not be available for the purpose of acquisition of land, construction
of building etc.
x) Financing under the facility shall be available to the extent of the C &F value of the
imported new plant and machinery and / or ex-factory/showroom price of the new
locally manufactured machinery to be purchased by the eligible borrowers.
xi) Advance payment to the extent of 20% of the C&F value / ex-factory / showroom
price can be made in terms of related underlying agreement by securing the bank’s
interest.
xii) Disbursements by banks/DFIs should not be made to the borrower directly;
instead payments shall be made to the manufacturers / suppliers of the
machinery.
xiii) Where a bank/DFI considers the requests of their borrowers for rescheduling of
loans granted under the Scheme, the principal amount of refinance shall only be
rescheduled in a way that total tenor of refinancing under the scheme does not
exceed maximum period of 10 years from the date of original disbursement made
by the banks/DFIs. Further, the borrower shall be liable to make payment of mark-
up at the rate applicable on the date of such rescheduling, or the original rate
whichever is higher.
9. Fines:-
i) In case of violation of the terms & conditions of the Scheme, the State Bank shall
reserve the right to recover the amount of refinance granted to the bank/DFI
along-with fine at the rate of Paisa 60 per day per Rs 1000/- or part thereof.
ii) In case, a borrower will make early repayment(s) of the amount of
loan/installment(s) and bank/DFI fails to repay the same to concerned office of
SBP-BSC within three working days as mentioned in clause Repayment of loan 7(i)
above, late adjustment fine will be charged from the concerned bank/DFI at the
rate of Paisa 60 per day per Rs 1,000 or part thereof or prospectively at such rate
as may be announced by the State Bank from time to time.
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