Export Refinance - Rate Has been changed ! Thrice ... And still more to come !

In order to support export business in the economy SBP has provided a facility to the exporters that they can can packaging credit on a significantly low rates, that finance is called FAPC (Finance Against Packaging Credit).

SBP has recently changed the rate on these loans, infact they have increased the rates from 6.5% to 8% which is the base rate.

Actually commercial banks give such loans to the exporters and then gets the reimbursement/refinance from SBP. They add a spread upto 1% for the services they charged so the rate charged from the exporters becomes Base Rate+1%.

There are actually two types of EFS, Part-I & Part-II

Part-I. Financing under Part I of the Scheme is a transaction-based facility. The finance is granted by the bank to the exporter on the basis of a Firm Export Order / Export Letter of Credit, for a maximum period of 180 days. The financing facility can be availed at pre-shipment stage for procuring inputs and manufacturing the goods to be exported. Financing at Post Shipment stage is also granted against goods already shipped to the importer abroad, for the period up-to realization of export proceeds or 180 days, whichever is earlier.

Part-II: Under Part-II of the Scheme, a revolving finance limit is sanctioned to the exporter equivalent to 50% of his export performance during the previous year on July - June basis. Exporters can avail this financing facility for a period of 180 days. Facility once availed needs to be repaid in totality. Exporters having availed Part-II facilities have to export / ship eligible goods and realize export proceeds and submit the evidence of performance on the prescribed statement within two months from close of each financial year.

For more detailed info of ERF visit these links

http://www.sbp.org.pk/sbp_bsc/apr/per-03/Chapter-3.pdf

http://www.sbp.org.pk/incentives/efs.htm

Now the concerning thing is that the State Bank of Pakistan intends to increase the export refinance rate from nine per cent and bring it at par with six months Treasury Bills rates that currently stand at 12.35 percent, SBP, Deputy Governor, Kamran Shahzad, told a meeting on Thursday March 30, 2010.

But points to ponder are how could our local industry survive and compete internationally if such facilities would not be available any more? or available but on the same cost as other loans? However, on the other hand Govt. borrowing are increasing regularly putting burden on the ordinary borrower for which availability of finance reduces when Govt. borrowings increases.

At Last ! I am a JAIBP Qualified !

Alhamdulilah! I have passed all the threee stages of JAIBP. It was a very nice experience while preparing and exploring various fields of banking. But there is lot more to go, because the next stage is AIBP, which is associateship of IBP. For that I have to get banking experience of atleast three years and after that I can take exams of AIBP. After AIBP one can get fellowship of IBP.

The first thing I have experienced after that, at least you can say you know something about banking. What benefits I will get after that.... I am still figuring that out. Definitely it will count in my next Performance Review, but the best thing is that through this I stayed in touch with the studies and kept my self updating.

But as its an ongoing process, so one has to keep himself updated through various sources all the time.... never get stagnant !

Numericals in the Paper of International Trade Finance and Forex Operations

If you are preparing for JAIBP exams, I recommend you to make a plan atleast three months before the exam date. Do a detail study of give syllabus outline in intial two months and in the last month you solve all the up-to-date papers of the relevant subject, which are already available on IBP website.

But don't think that the pattern of the exam will remain the same, as it is always changed from various perspectives. In the exam on Winter 2009 Int'l Trade paper there was not a single numerical. Although there were numericals in all the previous papers but this time there was not a single one. So they can always change the format, unexpectidly, so be prepared for the surprises.

Previous Kinds of Numericals

In the previous papers there are two kinds of numericals, first are the forex numericals in which you have to deal with the currency exchange rates and usually have to interpret the quoted forward rates.
The second type is of treasury positions, in which you have to handle the square, overbought and oversold position.

For the first kind of numericals I was fully prepared but for the second kind there was not a perfect prep. So I feel my self lucky that I didn't got the numericals.

ICC Publications

I have recently taken paper of International Trade Finance and Forex Operations in JAIBP and for that I have collected a lot of preparation materail. Now, after the exam I would love to share all stuff with you (I didn't got time to upload during the exams..... aaaahhhh !!!! u know exam stress).

So here are some ICC publications which are very important and should be a much read for the students of International Trade. Click on the links to open the files which are in PDF format,

Uniform Custom Practices ( UCP ) 600

Uniform Rules for Bank to Bank Reimbursement (URR) 725

Uniform Rules for Collection ( URC ) 522

Incoterms

Incoterms are International Commercial terms which are used in international trade. These terms are very important , both in international trade and for the studetns of International Trade Finance and Forex Operations - JAIBP.

In the institute of Bankers exams winter 2009 we got a complete question on Incoterms. That question contained 10 marks and we had to write thirteen incoterms and the groups in which they are categorized.

Here, I will recommend you to visit the incoterms page of wikipedia http://en.wikipedia.org/wiki/Incoterms to which I am very thankful. Its a very well written page and contains very detailed information. This also shows the diagram explaining how costs are shared as per a certain incoterm.

Keep your JAIBP result cards in your record !

Because recently a friend of mine was surprised when after two times taking the stage-II exams he was informed by IBP that he has only passed one exam in Stage-I. Although he passed two subjects and he received the result card showing that he has passed two subjects (But poor guy didn't bothered to keep the result card and roll number slips) and the Institue is saying that he never passed more than one subject.

Here I want to mention a rule of IBP that you can not take exmas of Stage-II untill you pass atleast two subjects of Stage-I and you can't appear in stage -III if you have any pending subject in stage-I.

So you all out there ! be careful and keep your result letters untill you get the degree.

An Overview of Banking Industry in Pakistan - Mid 2009

On the below mentioned link you can find a very good report on the Banking Industry in Pakistan, published by PACRA.


This report gives you an overview of the industry with the help of Grahs and Charts and you can get an idea very quickly without digging out complex text and reviews.



http://docs.google.com/fileview?id=0B26cFeYyZ30UYjQyYTYxYWItY2IxZi00ODE4LWEzMGQtMmRlMDI1ZWFhODRj&hl=en