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Islamic Export Refinance Scheme

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.

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Islamic Export Refinance Scheme

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  1. Islamic Export Refinance Scheme

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

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

  4. 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

  5. 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

  6. 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%

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

  8. Takaful Reserve • Purpose • 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

  9. 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

  10. IERS for Exporters

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

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

  13. Thank you

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