Lending Operation and Risk Management Lecture 1
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Lending Operations & Risk Management
A Credit Policy of a Banking Institute is a Combination of Certain Globally and Locally accepted Standards.
These standards are related to: • SAFETY • LIDUIDITY • PROFITABILITY • EXPECTED RISK 3
Financial Methodology: General Guidelines for Banks: 1.
Commercial Banks Should undertake only those credit risks for which they have required level
of risk assessment apparatus; In terms: Personnel System support
To supervise the Risk 4
General Guidelines for Banks: 2. Which Risk type the bank can and should undertake.
3. Procedural aspects of risk assessment method to be followed for risk types.
General Guidelines for Banks: 4. Type and proportion of security / collateral support needed for lending risks. 5. The maximum credit risk which may be taken on an individual borrower. 6. Spreading portfolio risk among customer / business / economic sector types. 6
General Guidelines for Banks: 7. Management Level competent to sanction credit facilities. 8. Monitoring and reporting systems, and internal controls. 9. The experience and the knowledge of the staff 7
General Guidelines for Banks: 10. Current and prospective Market Conditions.
11. Interest Rates. 12. The current position of loan portfolios 8
All these General guidelines are necessary to standardize the bases for financing decisions in order to comply with the principle of fairness and equity, and more importantly to ensure that all credit decisions are on consistent basis.
Who is the Borrower? Who CAN Borrow From Bank?
In extending financial facilities to customer, it is always important to know about the PURPOSE for which a borrower is asking for banks’ funds.
Who can borrow?????????? • • • • • • • • • •
Individual Joint Account holders Sole Proprietorships Role of Attorney Holder Partnership Limited Liability Companies Local Authorities and other statutory undertaking Persons Acting in fiduciary Capacity Trusts Non banking Financial institutions 12
Who can borrow? 1. Individual… For customer – bankers relationship: • Must be adult ( should be of 18 years of age and have CNIC) • Must be of sound mind • Must not be excluded from entering into a contract under any law for time being. 13
For extending any Financing Facility the following aspects must also be noted:
• Personal means of security recovering customer’s liability.
• Generally avail the finance facility for investments and / or non-commercial uses. Restricting the normal course of cash generation to serve as a regular source of repayment. 14
For extending any Financing Facility the following aspects must also be noted:
• Besides all adequate securities, an individual Should have reliable source of regular income. • Bank must stop all debit transactions in an account of a customer who is now becoming a lunatic. Incoming funds may be credited into his / her finance account. 15
For extending any Financing Facility the following aspects must also be noted:
• Individual may be declared insolvent by court of law upon petitioning by their unpaid creditors or at their own request.
Who can borrow? 2. Joint Account Holder… • Account of two or more persons. Who are neither partner nor trustee. • They are the title holders to the same bank account.
For extending any Financing Facility the following aspects must also be noted: • A joint Mandate signed by all joint account holders must be obtained. • It must be stated by the joint holders in writing as it which one, or more, of the joint account holders will operate the account.
Who can borrow? 3. Sole Proprietorship….. - Business enterprises which are owned and managed by a single person. - They may have too unlimited liabilities towards proprietorships’ creditors and the proprietor’s personal assets are available for satisfaction of creditors’ claim.
For extending any Financing Facility the following aspects must also be noted: • Good and Viable commercial purpose • Customer’s business assets for recovering financing facility.
Risk factors: - These businesses generally tend to have small base and loss sustaining capacity. - They are One –man / woman show. - Managerial Capacity and good health of the proprietor. - Management style - Book keeping - Unprofessional skills 21
Who can borrow? 4. Role of Attorney Holder….. • They are appointed by customer to execute documents on their behalf as well as operate their bank account. • Can be appointed by account holders for performing specific duties only.
Who can borrow? 4. Role of Attorney Holder….. • Duties of attorney holder must clearly and unambiguously spelled out in power of attorney ( on non-judicial stamp paper) to be signed by the customer and witnesses by the bank. • The customer must unconditionally accept liability for all actions of the attorney holder taken within the parameters specified in the Power of Attorney documents. 23
Who can borrow? 4. Role of Attorney Holder….. • Power of attorney is not issued for a specific period, it can be revoked by customer any time.
For extending any Financing Facility the following aspects must also be noted: • Job of banker is risky due to late submission of notice of revocation. • Imperative that the documents is registered with the appropriate authority. • They only advantage of insisting on power of attorney being registered is that the date of its revocation can clearly be established. 25
For extending any Financing Facility the following aspects must also be noted: • The attorney must be well versed with the affairs of the customer, and should also fulfill the conditions applicable to an account holder. • The power of attorney should be executed for caring out only those duties which are understood by the banker. 26
For extending any Financing Facility the following aspects must also be noted: • Limits of authority of attorney holder are very precisely spelled out in terms of permitted actions, borrowing powers and purposes for which borrowing should be permitted by the bank. • Notice of revocation of Power of Attorney will become effective from the day it is received by the bank and not from the date on which it is issued by the customers. 27
Who can borrow? 5. Partnership….. • According to section 4 of partnership Act 1932, PARTNERSHIP is the relation between persons who have agreed to share the profits and losses of the business carried on by all or any of them acting for all the other partners.
5. Partnership…. • All partner may not be actively involved in affairs of the partnership, though they remain partner for all legal purposes, and are liable to the creditors of the firm as much as the active partners. • Partnership may be created – Verbally or – In writing….. in the form a formal Partnership Deed giving the particulars, share and role of the partners of the firm. 29
5. Partnership…. i.
Active and Non – Active Partners: Partners may authorize one or more partner or non-partner to operate the firm’s account.
All partners jointly issue mandate to one or more of the partner or a non-partner giving him / her the power to: 1)Draw, endorse and accept bills on behalf of the partnership. 2) Mortgage partnership
3) Sell the assets of the partnership 4) Borrow for partnership firm and bind the 31 co-partners for such borrowing.
5. Partnership…. ii. Registered and Unregistered Partnerships: Registration of partnership with the office of the registrar of Partnership. Disadvantages of unregistered Partnership are: a. Cannot File Law suits to enforce rights arising out of contract with outsider. b. Cannot sue the firm for damages or wrongful dismissal or for claiming their shares in profits of the firm. 32
5. Partnership…. iii. Continuing and Non-continuing partnership: Change in partnership due to : a. Death of any partner b. Bankruptcy c. Retirement d. Addition of any partner e. Mental Incapacity of Partner They may occur change in the constitution (membership) of the firm
5. Partnership…. • Partnership deed of continuing partnership should clearly state the circumstances in which the partnership will stand dissolve. In the case of continuing Partnership the following points are important to be noted for a banker: i) Section 31 of the partnership Act provides that an incoming partner does not become liable to the creditors of the firm for any thing done before his /her joining the firm 34
5. Partnership…. ii) Operation of the account should be stopped immediately and the partners asked to resolve their differences or settle the partnerships’ liabilities and close the account if the partnership account is overdrawn and the new member does not agree to share the outstanding liabilities to the bank.
5. Partnership…. iii. If the partnership account is not overdrawn nor any of the financing facilities are unpaid, admission of the new partner may be accepted by the bank. iv. Bank must obtain a fresh Partnership deed or mandate dully signed by all partners to cover the future operation in the account. 36
5. Partnership…. v. Section 32 of the partnership act also states that, unless expressly agreed by the other partners: a. A retires partner is liable for debts of the firm incurred during the period he / she was the firm’s partner. b. If the balance in the account of the firm is in debit at the time of receiving a partner’s notice advising bank about his intension to retire, operation in the account should be stopped to determine the retiring partner’s liability. 37
v. Section 32 of the partnership act also states that, unless expressly agreed by the other partners: c. The partnership should advised immediately to either arrange for its substitution, takeover or settlement if the other partners are desired to continue operation in the partnership account. 38
5. Partnership…. vi. Properties owned by the retiring partner pledged or mortgaged to the bank as a security for extending financing facilities to the partnership, should be released only after a settlement.
Insolvency of Partnership
Liability of the partners
Who can borrow? 6. Limited Liability Companies….. • As per Section 2 of the Companies Act 1913 (Re-enacted in Pakistan as Companies Ordinance 1984)
Joint Stock Company as “(i) An association of Individuals for the purpose of profit, possessing a common capital contributed by the members constituting it, (ii) Such capital being divided into shares, of which each (member) possesses one or more (shares), and which are transferable by their owner. (iii) Incorporated under the relevant laws, it becomes an artificial person created by the law with common seal and perpetual succession. It is regarded as legal person 41 separate and distinct from its member”.
• Liability of the owners of the Joint stock companies is limited to the amount due to the shares held by them. • Companies are either Private limited Companies or Public Limited Companies. • Public Limited Companies cab be: – Listed companies; whose shares are listed / traded on one or more stock exchanges. – Unlisted Companies; whose share are not listed/ traded on any stock exchange. 42
1. Private Limited Companies: •
Generally smaller limited liability concern which are formed and operated under a set of restrictions imposed by Companies Ordinance. Like: (a) Public subscription to their shares is prohibited and, as such, (b) The number of members 9 shares holders) is restricted to 50 and Therefore, (c) Most shares are usually held by the director.
1. Private Limited Companies: • They are formed and governed by the same laws as applicable to Public Limited Companies. • Their formation must be file with the security and exchange commission of Pakistan ( SECP). • They should have their detail Prospectus giving the antecedents of the promoters, salient features of business venture being set-up and Memorandum and Article of Association. 44
1. Private Limited Companies:
• They must regularly file periodic returns as required by SECP. • Accounts with Paid-Up Capital of Rs. 3.000(m) and above must be audited by an auditing firm to be appointed by share holders in Annual general Meeting.
For extending any Financing Facility the following aspects must also be noted: • The manager must obtain the information about the following questions from the Memorandum And Articles of Association ( MAA) i. Whether the Director of the company have the power to borrow on behalf of the company or not? ii What are the limitations on the amount which can be borrowed by the company? 46
For extending any Financing Facility the following aspects must also be noted: iii. What is the purpose of borrowing? It must be within the scope of the company’s objective? iv. What powers are there to pledge company’s assets as security against credit facilities availed from banks? v. What are the requirements for execution of the security documentation duly supported by the board’s resolution, and for the registration of charge on the company’s47 assets
2. Public Limited Companies: • •
They are formed generally for setting up large business. Major concessions for them are:
– Public subscription to their shares is allowed. – The number of members ( share holders) is unrestricted. – Shares are usually held by large number of general public who elect Directors to run the affairs of the company on their behalf. – The board of directors is authorized to appoint the managing agents. – Managing directors are accountable to the Board Of Directors who are in turn accountable to the shareholders of the company. 48
Who Can Borrow? 7. Local Authorities and statutory undertakings: - The borrowing powers of the local authorities are regulated by the Federal or Provincial legislatures. - Powers are granted to the local authorities to borrow for short periods.
Who Can Borrow? 8. Persons acting in fiduciary capacity: • Trustees: Trust Act or Trust Deed • Executors / Administrators: Appointed by the court to wind up the estate of the diseased person an per the instruction contained in the WILL.
Who Can Borrow? 9. Trust Who Can Borrow? 10. Non – Bank Financial institutions ( NBFIs) Who Can Borrow? 11. Staff 51
Finance facilities Finance facilities Fund-based Facilities: …..for finance of a. Domestic business b. International Business i. Import ii. Export
Non – Fund-Based Facilities: Also known as Contingent Liability For supporting both i. Domestic Business ii. Foreign trade Businesses 52
Fund-based Facilities: Financing commercial and trade business Provide funding support for all possible Working Capital requirements of business and industry. W o r k i n g C a p i t a l: Capital in cash and stocks needed for a company to be able to work. 53
i. ii. iii. iv. v.
Fund-Based financing for Working Capital broadly includes facilities that customers avail from commercial banks in order to finance one or all of the following facilities: Acquire and hold stock-in-trade until it is sold or processed or used for manufacturing. Processing / manufacturing overheads for converting raw material into finished goods. Hold finished goods inventories until they are sold Credit sales realization period Promote the sale of goods i.e. selling, General & Administrative expenses
Purpose - Oriented Financing 54
Non- Fund-based Facilities: Contingent facilities / Liability for supporting both domestic and foreign trade businesses.
C O N T I G E N T L I A B I L I T Y: Liability which may or may not occur, but for which provision is made in a bank’s accounts. 55
Non- Fund-based Facilities: Meeting the banking needs of importers and all types of contracting firms by offering full range of :
Letter of Credit ( L/C)
Letter of Guarantee (L/G)
Non- Fund-based Facilities:
These facilities yield high return on assets
These facilities are high RISK assets 57
Classification of Commercial Credit Facilities Fund-Based Credit Facilities
General Financing Facility Inland Bill Financing Import Financing Facilities
Export Financing Facilities Contingent Facilities 58
General Financing Facility 1. Temporary Running Finance: Temporarily overdrawing the current account balance to meet unexpected and urgent finance requirement. This is allowed on the basis of: (SPTA) a. Security Coverage b. Previous conduct of the account with bank c. Turnover in the account d. Average balance maintained This facility is extended for very short period of time OR should alternatively be converted into regular running finance 59
General Financing Facility 2. Running Finance: A fluctuating – balance financing facility to meet : 1. Temporary funding shortfalls in fulfilling payment Commitments 2. Operating expenses. 3. Investment requirement This facility can be drawn up to stated limit & granted against the security of tangible assets to a reasonably acceptable extent, in addition to normal prime security of hypothecation charge over stocks-in-trade. This facility is normally allowed for maximum period of twelve months on roll-over basis 60
General Financing Facility 3. Demand Finance
This is short to medium term finance facility under which the usual maximum term is up to three years depending on the bank’s knowledge about the: i. Customer ii. Merits of the proposal iii. The nature of the financing needs 61
General Financing Facility: Demand Finance
1. Customer Credentials: A customer should fulfill the following criteria: a)Existing relationship with a satisfactory track record of business reciprocity and meeting re-payment commitment. b)Good business judgment and market reputation. c)Availability of adequate un-encumbered assets or otherwise as may be acceptable to the bank. 62
General Financing Facility: Demand Finance
2. Purpose 3. Re-Payment 4. Security 63
General Financing Facility 4. Term Finance: This facility required by customer for: a) Acquisition of capital good such as plant and equipment for expansion of the existing processing or manufacturing facility. b) Business premises construction while plant and equipment has either been acquired or its acquisition is being financed by another bank. c) Large lump-sum repayment to third parties. d) Re – structuring of existing liabilities to the bank.
General Financing Facility
Temporary Running Finance
Inland Bill Financing Financing the Trade Receivables Financing Domestic Business is essential For contributing to Economic well being of the country. In financing domestic business, financing trade receivables is a major commercial banking activity for which bank offers the finance facilities. 66
Inland Bill Financing Inland Bills Purchased ( IBP) - Clean
Inland Bill Purchased ( IBP) - Documentary
Inland Bill Discounting ( IBD)
1. Inland Bill Purchased (IBP) - Clean • Customer i. Commercial ii. Non-Commercial
Receive Payments through: a. Pay Order b. Cheques c. Demand drafts
I Drawn on banks in Pakistan ii. Collection of these instruments take time ( Especially when they are drawn on bank / branch located in other city or town. iii. Beneficiary of these instruments need financing against their proceeds. THE WAY TO ASSIST THEM IS TO PURCHASE THESE INSTRUMENTS. 68
1. Inland Bill Purchased (IBP) Clean Necessary points to be noted are: 1. Bills sholud normally be of the following types: a. Demand draft b. Pay order c. Government Cheques d. Cheque listed public companies 69
Necessary points to be noted are: 2. For a one-time purchase prior approval should be obtained from the competent authority. 3. For regular utilization of this facility a formal Inland Bill Purchased limit should be obtained. IBP involves the RISK of bills being dishonored.
In the event a bill purchase earlier is returned unpaid: • It Should immediately be debited to the customer’s account along with the markup from its value date. • The customer be informed in the usual manner prescribed for returning unpaid cheques.
2. Inland Bill Purchased- Documentary Contractor, Suppliers, and Manufacturers are paid for goods or services supplied by them either through: a. Open account arrangement b. Bills for Collection Drawn either at sight or on usance basis c. Bills draw under Sight Or Usance Inland Letter of credit 72
2. Inland Bill Purchased- Documentary • When Payment is claimed through bills drawn on collection basis, they are called Inland Documentary Bills. • Banks purchase these bills and pays their proceeds to the customer pending the realization of their proceeds from the drawee.
THE BANK EFFECTIVELY FINANCE THE TRADE RECEIVABLES OF THE CUSTOMER 73
Inland Documentary Bills
Letter of Credit
Usance Discounting 74
• Inland documentry bills purchase often involves the risk…….dishonored on presentation. • CAUTION A Bank lose the right of resources against the drawer of if the Inland LC is confirmed and advised through the same bank.
• The bank purchase the IDB and wait for the realization of the bill proceeds from drawee upon: – Maturity ( in case of usance Bills ) or – With in 10-15 days ( In case of Sight)
To qualify for being purchased the bills must be accompanied by: i. Air Way Bill, RR, TR……evidencing transportation of the goods to the buyer’s location. ii. Invoice in the name of the buyer iii. Packing list In case of LCs the customer must present all other documents required by LC.
Inland Documentary Bills Discounted (IBD) • The bank will discount these bills, pay off the customer and wait for realization of the bill proceeds at maturity. • Not must different from IBP facility except the bill being discounted must be duly accepted by the drawee for payment at maturity. 78
If the bill discounted earlier is returned unpaid: a) It should immediately be debited from the customer’s account with the value date of the purchase of the bill to recover its value along with the mark-up for the period of the facility. b) The customer be informed in as prescribed for returning unpaid cheques.
Inland bills facility
Inland Bills Purchased (IBP)-Clean
Inland Bills Purchased (IBP)Documentary
Inland Bills Discounted (IBD)
3. Import Financing Facilities Post import finance facility: Bank pay off the exporter and agree to be re-paid by the importer after a specific period.
Import Finance facility Finance Against Imported Merchandise (FIM)
Finance Against Trust Receipt (FATR)
Inward Foreign Bills (IFB)
Inward Foreign Bills (IFB) Reimbursement instructions : a) Claim Form Our account with ABC Bank ( Payment date remains uncertain which makes the timely funding of the Nostro account rater difficult) b) Claim from us by the telex / swift ( there is enough cushion for timely funding of the Nostro) 83
Remittance of funds against Import Documents convert the Contingent Liability into Funded Liability.
Finance Against Imported Merchandise (FIM) • Under this facility imported goods come under the custody of the bank as soon as they are off-loaded from the carrier ( aircraft . Ship) • Clearing / forwarding is carried out by the bank’s approved clearing / forwarding agents, and the agent is required to transferred the goods to a warehouse under the supervision of the bank’s either directly or through the bank’s approved Muccadam. 85
• The warehouse may be either rented or stored by the customer / Muccadam but the imported goods stored therein remain under the Bank’s custody. • The safety , security and maintenance of the record of the receipt and release of good is the responsibility of Bank’s Mucadam, whose services are paid by the Importer. 86
• Goods are released to the importer only on payment. • The process of determining the proportionate value of the goods to be partially delivered to the customer is facilitated by making reference to the packing lists accompanying the related import documents. • On receiving payment for goods the bank will issue a Delivery Order; wherein the Muccadam will be instructed to release the goods or part thereof as the case maybe. 87
If the goods are not sold in time, their condition may be deteriorate and they may either become un-saleable or may have to be sold at a large discount. The important points t be consider are: a. Customer must be pursued for taking prompt delivery of the goods against payments. b. Every time the goods may be released a Margin should be retain by bank c. Goods should be inspected frequently to ensure that they are being well looked after. 88
Finance against Trust Receipt (FATR) • Import documents are released to the customer after the customer signs a “Trust receipt” evidencing the fact that the customer is receiving custody of the goods as a “Trustee” of the bank not as the owner of the goods. • This is the liberal financing facility because it allows the customer to freely “deal” in the goods 89
• This facility is allowed to the imported for 60 or 90 days. • This facility is extended under the following circumstances: – the customer is trustworthy and is not likely to consume / sell the goods without paying their proceeds to the bank. – Security provided by the customer adequately covers the interest of the bank.
• Under this facility imported goods come under the custody of the CUSTOMER as soon as they are offloaded from the carrier ( aircraft . Ship) • The warehouse where the imported goods are stored shall be owned by the customer. Even in the rented house the imported goods must remain under the custody of the bank. 91
The safety , security and maintenance of the record of the receipt and release of good is the responsibility of Customer.
The important points t be consider are: a. Customer must be pursued continuously for depositing sale proceeds of the goods with the bank to gradually reduce the FATR facility ensuring its timely adjustment. b. The customer must submit stock reports regularly indicating therein the extent to which goods have been sold / consumed, and the outstanding FATR balance reduced accordingly. c. Goods should be inspected periodically to ensure that they are being well looked after. The frequency of the inspection will depend on 92 the nature of the goods
Import Finance Facility
Inward Foreign Bills (IFBs)
Finance against Imported merchandise (FIM)
Finance against Trust Receipt ( FATR)
4. Export Financing Facilities • Exporters have to wait for six months before they get paid by the importers. • This creates a need for financing on : – Pre-shipment basis – Post-shipment basis
• Due to intense price competition in exports, Government often provide a variety of incentives to exporters so that they can cut their costs and become price competitive in the international market. • To achieve these objectives government insist the commercial banks to: i. Re-financing on subsidized mark-up rates the pre-shipment finance facilities extended by commercial banks to their exporter customers 95
ii. Rediscounting export bills earlier purchase / discounted by commercial banks. Note: Such subsidized export finance is provided for selected items only. ** financing exports of items other than those covered by government sponsored Re-finance Schemes is undertaken on commercial rats of mark-up.
Export Re-finance • Government provides subsidized Export Re-finance facility through SBP. • Under SBP’s Export Refinance Scheme, exporters are provided funds at subsidized mark-up rates. • These funds are routed through commercial banks which serve as a medium for channeling them to exporters. 97
Export Re-finance • SBP only Re-finance banks’ export finance portfolio. • Assumes No risk • This facility is extended up to 150 to 180 days • On maturity of facility, SBP simply recovers it from commercial banks by debiting their accounts along with markup. 98
Export Re-finance • In this scheme export re-finance proposals are: – Received by banks – Investigated by the banks and examined for their soundness – Monitored for timely realization of export proceeds like any other financing proposal
Export Re-finance • All export Financing proposal should be scrutinized and monitored by the Export Re-finance Department of the bank. • Adequate securities must be provided by the exporter to secure the Bank against Risk of Non-realization of export proceeds.
Export Re-finance • In export financing the Bank's risk rests on: – The basis of export i.e. whether under LC or on contract basis. – The ability of exporter to perform under the export LC or contract. – On the efficiency and diligence of the negotiating or remitting banks abroad
Export Re-finance • Assessing these risks call for judging the exporter’s resources and ability to: – Obtain contract / export LCs from well reputed buyers abroad on reasonable prices and supply terms – Manufacture / process of or sub-contract these activities – Arrange requisite raw material in time for manufacturing / processing the consignment for effecting shipment on time. 102
• This call for thoroughly investigating exporter’s: – Past export records, especially for timely realization of export bills sent on collection basis because they involve a high risk of recovery. – List of buyers and countries they are located in. – Premises to verify manufacturing capability and the extent to which the exporter is dependent on sub-contracting. – Obtaining bank references to verify the above103 facts
Export Re-finance • Banks can expect to realize export proceeds only if the exporters: – Effects shipment on time, whether as per LC / contract terms or as amended later o – Submits complete and correct documents evidencing shipment of the goods – Request for routing documents through reputable banks abroad – Can provide evidence of buyer’s timely payments. 104
Export Re-finance NOTE: It is imperative that branches take all due care in document scrutiny
SBP Export Re-finance scheme: • This scheme enables exporters to purchase raw material and convert them into finished goods for export or alternatively obtain financing facility against export receivables.
SBP Export Re- Finance
SBP export Refinance Part –I
SBP export Refinance Part -II
ii. Post Shipment
SBP Export Re-finance • SBP sanctions a combine limit for both parts of the scheme to each applicant bank. • The limit is effective from 1st July for the current year and remains valid until 30th June of the following year. • The limit is equal to 3.75 times of a bank’s audited equity / net worth (paid-up capital plus all reserves minus accumulated losses as on 31st December o previous year. 108
SBP Export Re-finance • To avail the Re-finance limit, bank has to provide an undertaking to the SBP (standard text provided by SBP) wherein the Bank unconditionally undertakes to draw the facility exclusively for financing exports.
i. SBP Export Re-finance Part-I (Pre-shipment) •
Under Part-I of the scheme, exporters become entitled to export finance facility on fulfilling one of the following conditions: a) Receipt of export letters of credit favoring the exporters b) Executing firm sales contract with foreign buyers. 110
When exporters want to avail financing under PartI (pre-shipment) of the scheme, they are required to submit the following to the bank: a) Export L/C or firm contract executed within the foreign buyers (SBP to be provided photocopies of these documents after bank has marked its lien on the above original documents) b) Demand Promissory Note (affixed with appropriate revenue stamps) c) Undertaking on the appropriate stamped non judicial paper or on the Bank’s printed form affixed with appropriate special adhesive stamps. d) Complete form EC (SBP stationery) providing the details of the LC or contract 111