- This could be reflected by the increase in requested amount from Rs 36.1 billion by end April 2020 to Rs 517.4 billion by Dec 10, 2020.
State Bank of Pakistan’s (SBP) Temporary Economic Refinance Facility (TERF) has shown significant growth over the last nine months amid the COVID-19 pandemic.
As per SBP, this could be reflected by the increase in requested amount from Rs 36.1 billion by end April 2020 to Rs 517.4 billion by Dec 10, 2020 while over the same period approved financing has reached to Rs 222.7 billion from Rs 0.5 billion.
It is pertinent to mention TERF is a concessionary refinance facility aimed at promoting investment both new and expansion and/or Balancing, Modernization and Replacement (BMR). Financing under the facility is available through banks/DFIs to all sectors across the board except power sector where SBP’s refinance facility for renewable energy projects already exists.
On the basis of stakeholders’ feedback, few amendments in the scheme were made since its launch in March, 2020 which as per the central bank has positively impacted the uptake of scheme. However, the reduction in maximum end user rate from 7 percent to 5pc on July 08, 2020 resulted in bringing significant increase in number as well as amount of requests in following months.
The SBP was of the view that apparent deceleration in growth rates can be linked to the relatively higher base compared to the initial period of the scheme.
On March 17, 2020, SBP announced TERF and its Shariah compliant version to stimulate new investment in manufacturing. The total size of the scheme is Rs 100 billion, with a maximum loan size per project of Rs 5 billion and maximum end-user rate of 7 percent for 10 years.