KARACHI: The State Bank of Pakistan (SBP) has reduced markup rates on two of its refinance schemes to 5pc, from 7pc and 6pc respectively, according to a statement released on Wednesday.
Specifically, SBP has curtailed the end-user markup rates on Temporary Economic Refinance Facility (TERF) from the existing 7pc to 5pc, and on Long Term Financing Facility (LTFF) for the non-textile sector to 5pc from 6pc.
In its statement, the SBP said the central bank had reduced the policy rate by 625 basis points since 17 March to 7pc.
“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,” the SBP stated.
TERF was introduced on March 17 to provide stimulus to the economy by supporting new investment, balancing, modernization and restructuring of the existing projects. Under this scheme, as of 2 July, Rs10.5 billion have been approved by banks for 21 projects.
Under the new rates, SBP will now be providing refinance to banks at 1pc, with banks’ maximum margin of 4pc.
LTFF had previously been available for export-oriented projects for purchase of imported and locally manufactured new plant and machinery. However, in March, the SBP opened the LTFF to all sectors across the board.
Earlier, the end-user markup rate under this scheme was 5pc for the textile sector and 6pc for non-textile sectors. The State Bank has now reduced its refinance rate for the non-textile sector by 1pc, and therefore the end-user rate for all sectors across the board will be 5pc.
“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,” the SBP noted.