KARACHI: In order to facilitate businesses, the State Bank of Pakistan (SBP) Thursday allowed extension up to 180 days for settlement of Foreign Currency Loans amid COVID-19 pandemic. In view of the global outbreak of COVID-19, which has adversely affected the international trade transactions, the SBP has decided to make some amendments to the foreign exchange regulations to facilitate exporters and importers in settlement of their FE-25 loans.
Continuing with its commitment to support the industry amid COVID-19 pandemic, the SBP has further facilitated exporters and importers by allowing extension up to 180 days in settlement of their export and import loans under FE-25 Scheme.
Banks can now allow extension up to 180 days to exporters in settlement of their FE-25 loans in case they are facing delay in realization of export proceeds due to COVID-19.
Moreover, banks can also allow settlement of FE-25 loans to exporters through substitute contract during the extended period of 180 days where the original export contract has been cancelled due to COVID-19. Likewise, SBP has also allowed the bank to extend the maturity of FE-25 import loans by 180 days.
According a circular issued on August 20, 2020, Authorized Dealers (ADs) may extend the maximum period of 270 days (both pre-shipment & post-shipment), allowed for settlement of export loan in terms of above referred sub-para, up to further 180 days, thus making total tenor of the loan to 450 days.
This extension will be provided by ADs for loans maturing up to September 30, 2020 and will be subject to submission of satisfactory explanation by the exporter, along with supporting evidences, showing that the delay in realization of exports proceeds was caused due to COVID-19 pandemic.
Moreover, in case of pre-shipment FE-25 loans where the export contract has been cancelled, the bank may allow settlement of loan through realization of exports proceeds against substitute contracts/LCs, during the extended period of 180 days.
In addition, SBP has allowed ADs that they may extend the maximum period of 6 months, allowed for settlement of import loan, up to further 180 days, thus making total tenor of the loan to 360 days.
This extension will be provided by ADs for loans maturing up to September 30, 2020 and will be subject to submission of satisfactory explanation by the importer, along with supporting documents, evidencing inability of the importer to settle the loan within the prescribed time.
State Bank has also reiterated its unflinching resolve to continue working with all stakeholders to provide all needed facilitation in these uncertain times in the larger interest of people of Pakistan.
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