Circulars/Notifications / Infrastructure, Housing & SME Finance Department  


 SMEFD Circular No. 03 of 2008
November 12, 2008 

The Presidents/ CEOs,
All Banks.

Dear Sirs /Madam,

Export Finance Scheme - Modifications in Procedure for Refinance

Please refer to SMEFD Circular No. 02 dated November 5, 2008 on the captioned subject.

2- In order to further facilitate banks to provide financing to the exporters, following revisions have been made in Part II of the Export Finance Scheme (EFS):-

  • State Bank will also henceforth provide 100% refinancing to banks against export finance provided by them to exporters under Part-II of EFS subject to fulfillment of the requirements of the Scheme.
  • Export finance already provided by banks under Part-II of EFS from own sources at the ratio of 30 percent and outstanding as on date of issuance of this Circular shall be refinanced by the State Bank, for the remaining period of individual loan. For this purpose, the banks will have to approach the respective field offices of the SBP BSC along-with a list of cases under the Scheme for release of refinance against their share of 30% for the remaining period.
  • Banks shall henceforth not be entitled to deduct the funds provided under both parts of the Scheme from their Time and Demand Liabilities determined for the purpose of computation of both Cash Reserve Requirement and Statutory Liquidity Requirement

3- As the funds under EFS are provided to the exporters at substantially lower rates when compared with the market rates, banks are strongly advised to ensure legitimate utilization of these funds for increasing exports of the country. To ensure the same banks would also require to specifically seek a legally enforceable undertaking from the exporters that the funds so availed would only be used for financing export activities. Exporters Associations may also be advised to take measures as a self discipline mechanism to prevent any misuse of funds by their members.  Exporters availing Part-II facilities would be required to submit evidence of use of these facilities for financing their exports on monthly basis as per the mechanism to be developed by each bank. The verification teams appointed by the field offices of SBP BSC as also Banking Inspection Department-SBP would evaluate the efficacy of mechanism so developed by the banks. State Bank will further review the parameters of the EFS to strengthen its monitoring mechanism. Any misuse of the facilities availed under the Scheme on the part of exporters or banks will attract stringent punitive action against delinquents under the Scheme, which may include debarring of the access to the facilities extended under the Scheme to exporters/ banks. .

4- All other instructions on the subject shall remain unchanged.

Please acknowledge receipt.

Yours faithfully,,

(Mansoor H. Siddiqui)
Director


       
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