SBP reduces markup rate on refinance schemes.

KARACHI -- Taking cognizance of the negative fallout of COVID-19 Pandemic for the economy, State Bank of Pakistan (SBP) has been constantly taking steps to safeguard the businesses and households and a reduction in the policy rate has been a key step since March 2020.

SBP has reduced the policy rate by 625 basis points since 17th March, 2020 to 7 percent. To extend the benefits of this reduction in the policy rate to the users of its refinance schemes, SBP has now decided to align the end user markup rates on two of its refinance schemes for promoting investment in the country. Specifically, SBP has curtailed the end user markup rates on Temporary Economic Refinance Facility (TERF) to 5% from the existing 7% and on Long Term Financing Facility (LTFF) for non-textile sector to 5% from 6%.

Temporary Economic Refinance Facility (TERF): SBP introduced this facility to provide stimulus to the economy by supporting new investment and balancing, modernization and restructuring (BMR) of the existing projects. To further improve the incentive under the scheme, SBP has lowered the end user mark-up rates from existing 7% to 5%. SBP will now be providing refinance to banks at 1% with banks' maximum margin of 4%. Further, SBP...