Businessmen demand one-year moratorium

KARACHI - The industrialists have demanded of the State Bank of Pakistan to extend one-year industrial loans moratorium to the weaker segments of the economy by bringing down KIBOR at appropriate level to minimize the financing cost of the industrial borrowers which is remained high.
It must be noted here that keeping in view the SBP decision that allowed banks / DFIs to give grace period to their deserving borrowers having availed financing under Long Term Financing for Export Oriented Projects (LTF-EOP) including Debt Swap Facility under LTF-EOP Scheme and Long Term Financing Facility (LTFF) Scheme.
The trade community while talking to The Nation on Friday appreciated this move but at the same time they said that the facility was very limited to be covered the manufacturing sectors. They said that the banks were still charging high lending rates which were affecting the cost-structuring mechanism of the industrial sector.
The industrial sector is already being hurt by the energy and power crisis, hike in raw materials and swelling mark-up rates. "In order to increase the quantum of exports and build-up balance of payment position, the federal government should review the KIBOR rates that is quiet misleading the borrowers", a leading industrialist said.
M.A. Jabbar, Chiarman SITE Association of Industry has said, "we welcome this development but we are of the opinion that there is a dire need to access this facility to the actual borrowers of the industrial sector.
Earlier SBP has said banks/DFIs to provide deferment of one year in repayment of principal outstanding under the above schemes as of 31st December 2008. Under this facility the repayment dates for all instalments of principal amounts falling due during the period from 1st January to 31st December 2009 may be re-fixed after a period of one year from the respective due date.
According to SBP, this is a one-time facility effective from the date of issuance of the circular and will remain valid only up to March 31, 2009. Any request received after March 31, 2009 shall not be considered by banks/DFIs.
As per criteria set by SBP, Banks/DFIs shall take into account the track record, conduct of account, underlying collateral, financial condition and future outlook, volume of exports and overall risk profile of the borrowers in evaluating their requests for availing this facility.
SBP said in case the banks/DFIs are satisfied with the borrower and the underlying credit risk is acceptable to them, they can provide the grace period of one year under this facility.
In case a loan has already been rescheduled by a bank/DFI as per its policy or in case a borrower has defaulted in repayment of instalment(s) fallen due, as per original repayment schedule, and/or payment of mark-up on due dates, such cases would not be eligible for the benefit under these instructions., said SBP.