Banks referee in MINTEX, TUF match up

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The central bank Thursday asked the banks and development finance institutions (DFIs) to process claims for the provision of mark-up and investment support to the textile industry under the Technology Up-gradation Fund (TUF) scheme of the federal government.
TUF scheme, notified by the Ministry of Textile Industry (MINTEX), would encourage investment for up-gradation of machinery and technology in textile industry.
The banks and DFIs shall process the claims for “mark-up support” and “investment support” from the industry duly registered with MINTEX, said the State Bank.
However, it said, the banks and DFIs have been asked to forward the eligible claims after their scrutiny along with Certificate of Commissioning of machines and commercial operations issued by MINTEX, separately for each support, strictly in compliance with the terms and conditions prescribed in the ministry’s notifications to the offices of SBP-BSC.
Under the scheme, the claims for ‘Mark-up Support’ may be submitted on ‘Form TUF-I’ along with the documents prescribed in claim form. Only loans disbursed on or after Sept 1, 2009 are eligible for the mark up support.
Under the scheme, the federal government may reimburse 50pc of mark-up subject to a maximum of 5pc per annum, whichever will be less. However, one company registered as a separate legal entity would be eligible for a maximum mark-up support of Rs 50 million per annum for each sub-sector.
The mark-up support shall be admissible on the principal amount of loans outstanding on reducing balance on daily product basis, as per Original Repayment Schedule. The support shall not be extended to the borrowers having non-performing loans, classified under SBP Prudential Regulations unless the same are rescheduled or restructured by the financing bank(s).
Further it would also make the borrowers ineligible for availing the support during remaining period of the loan if any of their loans, long or short term, are classified after introduction of this support.
Similarly, the claims for investment support may be submitted on ‘Form TUF-II’ along with the documents mentioned in the claim form. The federal government may provide up-to 20pc investment support to SMEs (as defined under SBP’s Prudential Regulations for SMEs) for import of new plant and machinery upto Rs 10 million, through loans or from their own sources. Further, the federal government may also provide 5pc investment support to Non-SMEs and other eligible projects against imported new plant and machinery, through their own sources.
Under the scheme, the equity investment means financing of imported machinery and technology through own sources and that would be determined from C&F value of eligible machinery/technology mentioned in LC retired for this purpose. SMEs can also import eligible machinery/technology through Contract. However, to claim investment support, such SMEs shall be required to produce reliable evidence about actual import of requisite machinery/technology and payment to the foreign supplier through banking channel.