Items being imported on deferred payments: SBP reduces cash margin to 0pc

KARACHI: In order to provide relief to importers, the State Bank of Pakistan (SBP) has significantly reduced cash margin requirements on items being imported on deferred payments.

As per new directives, cash margin will be zero (0) percent for import payments beyond 180 days instead of the previous requirement of 100 percent.

On April 7, 2022, the State Bank imposed a 100 percent cash margin restriction on the import of 177 items regardless of the mode of payment to reduce the pressure on the exchange rate.

As per SBP’s directives, the cash margins on these specific items were set to remain in place till December 31, 2022.

Now, on August 5, 2022, the SBP has decided to provide big relief to importers by relaxing the cash margin condition on the import of different items.

SBP says has not stopped banks from making import payments

In this regard, it has been decided to relax the 100 percent cash margin requirements where the credit terms of import are more than 90 days; accordingly, the banks will obtain cash margins from importers as per the revised percentages.

As per fresh instructions, banks will obtain a 25 percent cash margin, where the term of payment for import is 91 to 180 days instead of the previous requirement of 100 percent. Whereas, the banks will charge zero percent cash margin in case of import payments beyond 180 days instead of the previous requirement of 100 percent.

In addition, the SBP said that the cash margin requirements will be applicable on the rupee equivalent amount of the import transaction. These instructions will be applicable on all new import transactions initiated by the bank.

However, on already initiated import transactions, the instructions may only be applied if the amendments (in terms of payment) are made subsequent to the date of the issuance of instructions in accordance with the new slab.

According to the cash margins deposited by importers on all items subject to CMR would be non-remunerative. All other instructions will remain unchanged. To ensure effective monitoring, banks are already required to submit details of cash margins, applicable on all items, collected from importers on a monthly basis, as per prescribed format.

Copyright Business Recorder, 2022