FERA- Rupee Loan

Wednesday, September 27, 2023 9:52 PM

FERA

Rupee Loan
Foreign Currency Loan

Rupee Loan

Borrowing in PKR by Foreign Controlled

companies registered in Companies Act Loans etc against Guarantees of Non-
Borrowing by Non-Resident Pakistanis Borrowing by Resident Foreign Nationals Residents / Collateral held outside
2017 (Para 2) (Para 3) (Para 3) Pak. (Para 5)

 Allowed to borrow for any purpose
except purchase of shares (of any
kind)
 Prudential Regulations (by SBP), KYC
and ‘AML/CFT’ standards shall be
followed
 Purpose of borrowing must be clear
and documented in Authorized
Dealer’s and company’s record.
 Authorized Dealers have general
permission to grant such loans in local
currency
 Prudential Regulations (by SBP), KYC and
‘AML/CFT’ standards shall be followed
 Purpose of borrowing must be clear and
documented.
 For purchase of immovable property,
banks can lend subject to following
conditions:
- Loan will be paid in FCY (remittances or
FCY accounts)
- Sale proceeds of such immovable property
shall not be eligible for repatriation.
Authorized Dealers may grant such rupee
loans, except for purchasing immovable
property and purposes restricted by SBP /
any other law.
 Authorized Dealers may give PKR loans
to their resident clients
against guarantees of non-residents (or
banks operating abroad)
 Compliance of Prudential Regulations is
must.
 Guarantees involving FCY outflows (for
due diligence fee,
commission fee, guarantee premium fee
etc) shall require prior
approval of SBP.

Loans & Overdrafts by Authorized Dealers in FCY. (Para 6)

 Will not grant any such loans without prior approval of SBP (except FE-25 loans)
 Applications should be made to SBP mentioning purpose, particulars of the guarantee or collateral, if any, and manner in which loans or overdrafts are expected to be paid.
FERA- Foreign Currency Loans
Wednesday, October 11, 2023 9:35 PM
Private Sector Borrowing from
Abroad (PSBA)
Eligible Borrowers:
 Companies registered under Companies Act,
2017 and Independent Power Producers (IPPs),
except financial intermediaries(Banks, DFIs,
NBFCs, Payment System Providers etc)
 Branches of foreign companies in PAK opened
with permission of Board of Investment (BOI)
 Long term credit rating of companies or their
sponsors must not be lower than BB- issued by a
recognized local/international credit rating agency
(except in the case of intercompany loans)
 Credit rating condition not applicable to
exporters (If PSBA is up to 80% of annual exports)
Note: Individuals, trusts, non-profit organizations
and NGOs are not eligible to raise PSBA.
Foreign Currency Loans
Foreign Currency Trade
financing from Abroad (FTFA)
Eligible Borrowers`
 Companies registered under Companies Act, 2017
and members of chambers of commerce, except
financial intermediaries (Banks, DFIs, NBFCs,
Payment System Providers etc)
 Branches of foreign companies in PAK opened with
permission of Board of Investment (BOI)
 Long term credit rating of companies or their
sponsors must not be lower than BB- issued by a
recognized local/international credit rating agency
(except in the case of intercompany loans)
Note: Individuals, trusts, NPOs and NGOs are not
eligible to raise PSBA.
Financial Sector Borrowings
from Abroad (FSBA)
Eligible Borrowers:
 Banks, financial institutions, Development Finance
Institutions (DFI),housing finance companies, non-
banking finance companies, microfinance
banks/institutions, Payment System Operators,
Payment System Providers and branches/subsidiaries
of foreign banks in PAK.
 Requests from Authorized Dealers/banks in Public
Sector will be dealt with at EPD of SBP,
 Economic Affairs Division, Government of PAK will
deal with the requests received from all other Public
Sector Enterprises (PSEs) operating in financial sector
of PAK.
 Private Sector Borrowing from
Abroad (PSBA)
Eligible Lenders:
 Internationally recognized such as Foreign Banks,
International Capital Markets, Multilateral Financial
Institutions (e.g IFC, ADB, etc), Government owned
Development Financial Institutions, Export Credit
Agencies, Suppliers of Plant & Machinery, and
parent/associates.
 Only those lenders, who comply with the
international standards (Financial Action Task Force
Guidelines) of ‘Anti Money Laundering (AML)’ &
‘Combating Financing of Terrorism (CFT)’.
Pre-Payments:
 Prepayment of PSBA will not be allowed except
for the “PSBA for Project Financing”
 Swapping PSBA with local currency loans will not
be allowed.
Categories:
• PSBA for Project Financing
• PSBA for Working Capital
• PSBA for Bridge Financing
• PSBA mobilized through Securitized
instruments, issuance of bonds, and financing
under Islamic arrangements
Foreign Currency Trade
financing from Abroad (FTFA)
Eligible Lenders:
 Internationally recognized such as banks,
International & Multilateral Financial Institutions etc
 FTFA may also be raised from suppliers/buyers and
parent companies
 Only those lenders, who comply with the
international standards (Financial Action Task Force
Guidelines) of ‘Anti Money Laundering (AML)’ &
‘Combating Financing of Terrorism (CFT)’.
Categories:
• Import loans under FTFA
• Export loans under FTFA
Financial Sector Borrowings
from Abroad (FSBA)
Eligible Lenders:
 International financial institutions, donor
agencies, specialized banks/institutions and
overseas branches/correspondents of Authorized
Dealers (banks) in PAK.
 Only those lenders, who comply with the
international standards (Financial Action Task
Force Guidelines) of ‘Anti Money Laundering
(AML)’ & ‘Combating Financing of Terrorism
(CFT)’.
Pre-payments:
 The request for prepayment of FSBA will be
evaluated by SBP on a case to
case basis.
Categories:
• Financial sector borrowing from Abroad.
• Credit lines/ overdrafts established by Authorized
dealers with correspondent overseas branch
• FSBA by authorized dealers/Banks and branches of
foreign banks in Pakistan for Liquidity Mngt. Purpose
• Long term FSBA by Authorized dealer
• FSBA by Microfinance Banks Institutions in Pakistan
• FSBA by other financial institutions
PSBA
Wednesday, October 11, 2023 10:19 PM
Descriptions PSBA for Project Financing
Purpose Can be raised for:
• Meeting capitalized cost (Preliminary
expenses,import of plant,
procurement of technical expertise
etc)
• Repayment of existing PSBA
Maturity Should not be less than 3 years
Borrowing Cost Ceiling Borrowing Cost Ceiling excluding relevant
benchmark rate
- 350 basis points for 3 to 5 years loan
- 600 basis points for more than 5 years loan
PSBA for Working Capital
Can be raised for:
• Meeting FCY component of
working capital
requirements of companies
established/ operating in
Pakistan
Shall range between 1 month to 1 Shall range between 6 months and 1 year Not defined
year
Borrowing Cost Ceiling excluding
relevant benchmark rate: 200
basis points
PSBA for Bridge Financing
Will be raised:
• Only for meeting financing gap
arising from outstanding project
payments and delays in
disbursements from committed FCY
equity or PSBA for Project
Financing.
Borrowing Cost Ceiling excluding relevant Not defined
benchmark rate: 200 basis points
PSBA Mobilized through securitized
instrument (Require prior approval of
SBP)
Can be used:
• for establishment of new projects
• import of plant & machinery
• modernization/expansion of existing
projects,
• buying/acquiring patents/operating
licenses/trademarks,
• procurement of technical expertise
and
• repayment of existing PSBA in all
sectors including SME and
infrastructure projects.
FTFA
Wednesday, October 11, 2023 10:34 PM

‘FTFA’ refers to credits extended for imports/exports directly by overseas suppliers/buyers, banks and financial institutions to
finance LC and other overseas contractual obligations.

Import Loans under FTFA Export Loans under FTFA

 Can be used to finance LC and other overseas
contractual obligations for transactions over
USD 5 million
 The maturity shall range between 2 years to
5 year.
 Borrowing Cost Ceiling excluding relevant
benchmark rate: 350 basis points
 Amount of loan can be retained in a FCY
account (opened under requirements of
Foreign Exchange Manual)
 Exporters, having firm commitments with overseas buyers, may
obtain FTFA in convertible currencies
 Maximum tenure of loans will be period generally fixed for
repatriation of export proceeds + 60 days.
 Borrowing Cost Ceiling excluding relevant benchmark rate: 200
basis points (for maturity up to 240 days)
 After availing facility, he cannot obtain export finance in PKR
from a PAK bank and any other for same export.
 FCY amount of loan will be converted into PKR with Authorized
Dealer and will not be retained in FCY.
 The FCY loan will be repaid, along with interest, out of the
related export proceeds.
 In case of cancellation/delay of export, exporter may repay loan
from the proceeds of other export consignment or from his FCY
account.
FSBA
Wednesday, October 11, 2023 10:40 PM

‘FSBA’ refers to FCY borrowings from abroad by the eligible borrowers operating in the financial sector of PAK.

Descriptions Credit Lines/Overdrafts established by
Authorized Dealers with
Correspondents/Overseas Branches.
Maximum Maximum maturity will be 7 days
Maturity
Borrowing Borrowing Cost Ceiling excluding
Cost Ceiling relevant benchmark rate: 100 basis
points
Security In case of any security, arrangement
details to be furnished to EPD SBP for
approval.
FSBA by Authorized Dealers/Banks and
Branches/Subsidiaries of Foreign Banks in PAK
for Liquidity Management Purpose.
Maximum maturity will be 1 month to 1 year
Borrowing Cost Ceiling excluding relevant
benchmark rate: 350 basis points
Borrower can borrow FCY up to 100% of its
unimpaired capital as per its latest audited
financial statements
No security would be offered to lenders
(borrowing will be clean and based on balance
sheet strength).
Long Term FSBA by Authorized Dealer. FSBA by Micro Finance Banks/Institutions in PAK. FSBA by other Financial Institutions
i.e. NBFIs, DFIs, PSOs, PSPs, Leasing
Companies, House Building Finance
Companies and Insurance
Companies.
Not Defined Maximum maturity of the loan will be 2 years Not Defined
Case to Case basis Cost of borrowing will be negotiable and competitive with Case to Case basis
prevailing rate in local market.
 If cost of borrowing from international institutions is higher than
LIBOR + 5%, Micro Finance Banks/Institutions shall submit local
quotes of rate from local lending institutions,
Not Defined Issuance of guarantees by sponsor/donors in favor of lenders is Not defined
permitted under this registered loan