SBP expands scope of economic relief facility.

KARACHI -- The State Bank of Pakistan (SBP) on Friday allowed subsidised financing for setting up of new plants and expansion of existing units while the maximum amount for a single unit has been set at Rs5 billion to boost economic activities in the manufacturing sector.

The SBP on Friday said it has opened up its subsidised Temporary Economic Relief Facility (TERF) for Balancing, Modernization and Replacement (BMR) and expansion of existing projects.

Under this scheme, the SBP provides refinance to banks for their onward extension of financing at maximum end-user rate of seven per cent for 10 years.

'The maximum financing for a single project under the scheme is Rs5bn. The objective of this facility is to boost economic activity through investments in manufacturing units,' said the SBP.

While allowing the BMR and expansion of existing projects, the SBP has permitted financing for purchase of new-imported and locally-manufactured plant and machinery against foreign letter of credit (LC) and inland LC.

'The funding under the facility cannot be used for procurement of second-hand machinery, land or carrying out civil works,' said the SBP.

According to the circular issued by the central bank, in addition to new projects, existing projects and businesses are being allowed to avail financing under these facilities for BMR and expansion of their projects or businesses.

'This measure has been taken to provide further stimulus to the economy in the context of Covid-19's impact on the economy, to support investment in the country for modernising or expanding...