Countering the covid-19: measures taken by SBP.

Byline: Ahsan Nisar

Provision of disinfected currency notes by banks

Recognizing the need for issuance of fit, authenticated and disinfected cash by the banks, detailed instructions have been provided by State Bank of Pakistan (SBP) to ensure to clean, disinfect, seal and quarantine all cash being collected from hospitals and clinics and to block circulation of such cash in the market.

The banks shall report daily collection of cash from hospitals to SBP, which shall credit bank's accounts for the amounts so quarantined by them. Further, arrangements are being made to provide sufficient fresh or disinfected cash to banks enabling them to issue fresh cash or the re-issuable cash that remained in quarantine for at least fifteen (15) days to their clients. Banks have been ensured that SBP has sufficient quantity of such cash, and it would meet all demands for such cash.

Facilitating new investment

SBP announced a 'Temporary Economic Refinance Facility (TERF)' and its Shariah compliant version to stimulate new investment in manufacturing. Under this scheme, the SBP will refinance banks to provide financing at a maximum end-user rate of 7% for 10 years for setting up of new industrial units. The total size of the scheme is Rs 100 billion, with a maximum loan size per project of Rs 5 billion. It can be accessed by all manufacturing industries, with the exception of the power sector, where an SBP refinance facility for renewable energy projects already exists.

Relaxing credit requirements for exporters and importers

* Relaxation in matching amount: SBP has reduced performance requirements from twice to one and a half time effective for current year as well as FY-20.

* Extension in time period to meet performance requirements: the time period for exporters to show performance has been extended till Dec-20. This will help the exporters to avail higher limits for FY-21.

* Extension in time period to ship goods: The shipment period has been extended from 6 to 12 months. Therefore, exporters will not be liable to pay penalties due to breach of this condition during January to June 2020.

* Relaxation in conditions for LTFF: the requirement of sales for LTFF has been reduced to 40% or USD 4 million during the period Jan 01, 2020 to Sept 30, 2020. Moreover, the requirement of annual projected exports performance has been extended by another one year.

Realization of export proceeds

SBP has also allowed banks to enhance the time period for realization of...