SBP’s TERF Scheme Proving Fruitful For the Pakistani Economy

The State Bank of Pakistan (SBP) initiated a Temporary Economic Relief Facility (TERF) scheme back in Mid 2020. Basically, TERF is a concessionary refinance facility that promotes investment in new projects and expands the existing projects. Before moving forward, I would like to explain the term, refinancing facility to provide more clarity

Refinance facilities are targeted loans issued from the State Bank of Pakistan (SBP) in order to raise exports and industrial growth to improve the country’s economy. SBP has time-to-time introduced these schemes under its refinance window to guarantee adequate financing to the value-added enterprises at competitive rates to increase production capacity and to meet working capital requirements. Basic Information regarding the TERF Scheme: Now, if we talk about the TERF Scheme, it incorporated a measure called Balancing, Modernization, and Replacement (BMR). SBP had taken these initiatives to provide incentives to the economy amidst the COVID-19 pandemic. Under the TERF Scheme, the SBP is providing refinance to banks for the sake of their onward extension of financing at a maximum end-user rate of 7% for a period of ten years. Under the TERF Scheme, the maximum financing for a single project is Rs5 billion.

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