Sindh Govt, SBP announce subsidy for rice husking mills

The Sindh Government in collaboration with the State Bank of Pakistan (SBP) has offered interest subsidy of 6.25% and credit risk sharing facility of upto 30% against the long term loans to be extended to rice husking mills in Sindh by banks under the existing SBP Refinancing Scheme. A SBP statement here on Tuesday said that these additional incentives being offered by Sindh Enterprise Development Fund (SEDF) will encourage rice mills of Sindh to carry out BMR of their units so as to reduce their losses and improve the quality of their products.

The improved profitability projections with the availability of additional incentives under the scheme will also encourage potential Small and Medium Enterprises (SMEs) to establish new rice husking units in Sindh.

The broad features of the Scheme to be managed by State Bank were summarised as: i)Mark up subsidy: Mark up rate for the Facility shall remain the same viz 9% for financing upto 5 years as applicable under SBP's Refinance Facility; however, the end-user rate will be 2.75% p.a. only, that is, the difference of 6.25% (SBP share) will be borne by SEDF. ii)Guarantee Cover: Banks will be offered credit guarantee cover of 30% against their outstanding loans under the Facility. As mentioned, the cover will be provided on the strength of financial support extended by SEDF.

Tenor of loans: Facility shall be available against loans granted up-to the period of five years. Loan Limit: Maximum loan size for a single borrower shall be Rs 10 million. The banks which have already obtained refinance limits under SBP's Refinance Facility for Modernisation of SMEs may now apply for the Guarantee and subsidy limits under this Scheme, according to a Circular issued by SBP to all banks on Tuesday.