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KARACHI: Financial Institutions approved loans worth Rs 8.4 billion during the last nine months under the State Bank of Pakistan's Refinance Facility to facilitate hospitals for combating COVID-19.

The SBP launched time-bound RFCC on March 17, 2020 and its Shariah-compliant facility was aimed to support hospitals and medical centers for enhancing the capacity of health services to deal with health emergency, especially in the backdrop of COVID-19.

Under this scheme, the SBP is refinancing to the banks at 0 (Zero) percent to provide financing at a maximum end-user rate of 3 percent to hospitals and medical centers for 5 years with grace period of 6 months. Manufacturers of masks, protective dresses, testing kits, hospital beds, ventilators and other items to combat COVID-19 were also allowed to get advantage of this special financing opportunity.

After the launching of this scheme, hospitals and medical centers appreciated the SBP's measures and accordingly, applied for the financing to enhance their medical facilities to deal with COVID-19.

According to SBP's latest, over the last nine months since March 2020, hospitals and medical centers have applied Rs.13.2 billion under RFCC. Out of these requested loans, up to December 31, 2020, the banks have approved some Rs 8.4 billion financing for the hospitals and medical centers.

Banker said that the financing under the side scheme is expected to cross Rs 10 billion as a number of the applications are in process and the scheme will continue till June 30, 2021.

As per terms and conditions, the scheme validity was the September 30, 2020 except for new hospitals. However, Letter of Credit (LCs) established under approved applications till September 30, 2020 were also eligible for refinance even if these LCs are established after the September 30, 2020. The validity RFCC for new hospital is June 30, 2021.

Initially, the total size of the scheme was Rs 5 billion, with a maximum financing limit per hospital or medical center of Rs 200 million. However, in April 2020 maximum loan limit was extended Rs 500 million per hospital and medical center and Rs 1 billion for setting up of new hospitals. On September 29, 2020, the SBP further enhanced the loan size from Rs. 500 million to Rs 1 billion per hospital aimed to meet financing needs for setting up of new hospitals.

Copyright Business Recorder, 2021