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KARACHI: In order to facilitate banks and exporters, the State Bank of Pakistan (SBP) has digitized the process of obtaining refinance from SBP by banks under the Export Finance Scheme (EFS) for both conventional and Shariah-compliant versions.

According to SBP, initially, the digitized process of EFS cases will run in parallel with existing manual submission for a short period. Thereafter, the paper-based submission of cases by banks will permanently give way to electronic submission of cases. This initiative is a part of SBP’s Vision 2020, aiming to implement a modern framework for the retention and sharing of information and bring ease of doing business.

In a major step towards ease of doing business under the SBP strategy to promote the use of digital channels to enhance operational efficiency and improve ease of doing business, the functions of Export Finance Scheme (EFS)/ Islamic Export Refinance Scheme (IERS) have been digitized and centralized at SBP BSC Karachi.

A new operational mechanism has been developed on SBP’s online Knowledge Management (KM) Portal-Regulatory Approval System (RAS) in consultation with banks, which will serve as an online platform for transmission of EFS-related information/ data between SBP BSC and banks.

Effective February 01, 2022, banks will be required to submit EFS and IERS related information through KM Portal-RAS. This mechanism will run in parallel to the existing manual process for the next 04 Weeks.

Export refinance: no room for limit enhancement?

During the parallel run, banks will submit hard copies of documents to respective SBP BSC offices along with digitized format via KM-RAS and loans will be processed by SBP BSC through digitized mechanism. Meanwhile, banks will align their systems with the revised operational mechanism.

Banks will also strengthen their internal controls for processing of EFS/IERS cases to avoid operational/ reputational/ legal or any other risk. The implementation of digitization of EFS functions will enable SBP to delegate some of the operations to banks, such as sub-allocation of EFS limits by banks as per their own requirements.

Digitization of the refinance process is envisioned to effectively use technology for enhancing operational efficiency.

Now EFS related cases and other relevant data will be submitted electronically to State Bank by banks through an online platform for expeditious regulatory decisions. This online platform will also enable banks to track the updated status of EFS related cases submitted to SBP/SBPBSC, on a real time basis. Banks will be able to retrieve the system-generated reports for updated status for onward sharing with their customers.

Under the digitized mechanism, there will be no need of transferring an exporter’s limit from one SBP BSC office to another SBP BSC office. This will ensure swift processing of EFS cases and benefit the banks/ exporters availing financing facility under EFS.

SBP expects that the digitization of EFS functions to conserve resources and bring efficiency by reducing turn-around time and replacing the paper-based submissions of cases that are prone to logistic and storage issues.

After successful parallel implementation of digitized operational mechanism, banks will have to submit only hardcopies of agreement and Demand Promissory Note once in a year or in case of enhancement of allocated limit, for covering their respective annual allocated limit under EFS/IERS to SBP BSC.

However, records of all other documents of all EFS/ IERS cases need to be maintained at respective branches of banks to be readily available for subsequent on-site verification/inspection by SBPBSC/ SBP.

With effect from February 01, 2022, all information/data related to new loans and roll-over under EFS/ IERS Part I/II will be submitted though KM Portal - RAS in line with revised operations mechanism. However, EFS loans outstanding as on 31st January 2022 will be processed as per existing mechanism till their maturity. SBP has mentioned that the cases submitted with incomplete documents or without following the described procedure will not be attended and will be returned to the respective bank.

Copyright Business Recorder, 2022

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