Karachi: The State Bank of Pakistan (SBP) has reduced the end-user mark-up rate on its Temporary Economic Refinance Facility (TERF) and the Long Term Financing Facility (LTFF) for the non-textile sector — with the initiative aimed at encouraging investments, a news source reported earlier today (July 9).
According to the details available, the mark-up rate on TERF has been reduced from the existing 7% to 5%, while the mark-up on LTFF for the non-textile sector has been reduced from 6% to 5%. As per a statement issued by the State Bank, the purpose of the reduction in these rates is to extend the benefits of the reduction in policy rates to users of these refinance schemes, and to encourage investments.
The statement also pointed out that the central bank has reduced the policy rates to 7% after reducing it by 625 basis points since March 17.
The TERF was introduced to support new investments and for the balancing, modernisation and replacement (BMR) of the existing projects. The LTFF on the other hand is one of the SBP’s oldest refinance schemes, aimed at providing financing for the export-oriented sector’s machinery and factories. The LTFF mark-up for the textile sector had already been set at 5% earlier this year.