Islamic Export Refinance Scheme

Structure of Presentation Objectives of the scheme SBP-IBI arrangement Limit Musharaka Pool Profit & Loss Sharing IBI - customer arrangement Part I Part II Penalties

Objectives of the Scheme To Provide Liquidity to Islamic Banks for export financing To Promote Exports To change Composition of Exports

SBP – IB/IBB Arrangment Distinctive Features Musharaka between SBP & Bank Profit and Loss sharing of Musharaka Pool Payment of Provisional Profit Takaful Fund for SBP

Limits under IERS Assigned Annually – Reviewed Quarterly SBP’s internal Criteria 1.5 times equity for IBs 20% of EFS for IBBs SBP’s considerations while assigning limits

Musharaka between SBP & Bank Minimum 10 blue chip companies Blue Chip companies criteria Credit Rating of B+ or higher or Good Track record on the stock exchange (if listed) or ROE of previous 3 years > EFS rates and NO adverse CIB report SBP contribution to Pool up to investment provided Bank contribution equal to or more than SBP’s Pool exposure to any one sector < 50%

Profit & Loss Sharing Gross profit PLS as per weightages assigned Less provisions for year Plus recoveries against earlier provisions PLS as per weightages assigned EFS rates used as benchmarks What is Provisional Profit?

Takaful Reserve Purpose How it is created SBP’s share of losses shall first be met from the Takaful fund. How it is created Differential amount of SBP’s share in Profits (Actual Profit as per Audit less Provisional Payments) Takaful Reserve is for SBP only – Not Banks

IB/IBB & Customer Arrangement Similar to EFS IERS is available as: - Part-I (Transaction Based) DE/IDE both for pre-shipment - Part-II (Limit based on previous Performance) DE only

IERS for Exporters Part I Part II Indirect Exporters as well as Direct Exporters Direct Exporters only Tenor IDE-120 days; DE-180 days 180 days Document for availing IDE: Form 4 ILC/SPO/ Financing Agreement DE: Form 3/ FEO/ELC/ Financing Agreement Limit assigned based on EE -1 Form 3 DP Note Documents to submit IDE: Invoice, Delivery challan /GNR) Truck/Railway Receipt, DE: Original Duplicate of Form E, BL/AL, Invoice, EPRC EF-1 Substitution Allowed Not Required

Penalties / Fines For defaults/ breaches in agreement fines are charged from the Exporter & banks

The Scheme is available on SBP website http://www.sbp.org.pk/incentives/iers.htm

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