Please refer to the Instructions issued on the captioned Scheme from time to time.

2. It has been decided to amend the existing instructions on the captioned Scheme particular those relating to the provision of finance to the exporter and the grant of refinance by SBP Under the revised modus operandi the banks shall ensure that the financing facilities under the Export finance facilities scheme are made available to the other entity generating exports i.e. to the other entity generating export i.e. indirect Exporters instead of existing procedure to allow finance to entity one entity directly exporting the eligible commodities Under the revised procedure, offers have also been made to ensure that the small medium and emerging exporters as also indirect exporters have adequate access to the credit facilities under Export Finance Scheme, if otherwise eligible. As an important tool to ensure this, the Government also intends to introduce Pre-shipment Export Finance Guarantee Scheme to be administered through a new corporate entity The cover obtained by the Exporters under the said Scheme particularly the Small and Medium Exporters would substitute for the collateral requirement of the banks and thus hedge the financing risk of the commercial banks against manufacturing non performance and non delivery risk and non payment by the exporters. Detailed instructions in this regard shall be issued shortly.

3. The State Bank of Pakistan is also in the process of announcing the Foreign Currency import Finance Scheme thereby enabling the Direct Exporter or Indirect Exporter to have access to foreign currency financing for the purpose of import of imported' inputs, in order to execute his export order, I supplies to the Direct Exporter backed by a Firm Export order credit Export letter with the Direct Exporter. Detailed instruction in this regard shall be issued separately. it is also clarified that the requirement of 30% minimum cash margin shall not be applicable on LCs established for the items imported against various Schemes of temporary imports for exports e.g. NDND Scheme Manufacturers in Bonded Scheme etc. it is further clarified that the words "loans/credit/aid" appearing in BPRD Circular No.40 of 21st November, 1995 would include the facilities availed by the beneficiaries under the proposed FCIF arrangements.

4. The maximum rate of finance to be charged by the banks from their borrowers under the Scheme shall remain 8% as at present. Where refinance is obtained by the banks against finances already provided under the Scheme, the State Bank shall share in the overall profit of the banks concerned subject to a maximum of 6% when annualized. The banks shall invariably make payment of the provisional profit on quarterly basis to the concerned Office of the State Bank of Pakistan on or before 7th of the month after end of the quarter concerned.

5. Revised instructions on the Export Finance Scheme are enclosed, which shall become effective from 1st January 1999. A handbook containing instructions on the EFS is also being issued separately for the guidance of Commercial Banks and Exporters.

Please acknowledge receipt.

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