MFD
(Refinance) Circular Letter No. 07 of 2007 |
December 19, 2007 |
The
President/CEO/Country Head,
All Banks,
Dear
Sirs / Madam,
Export
Finance Scheme - Modifications in procedure for refinance
Please
refer to the instructions as contained in our SME &
MFD Circular No. 03 dated 31st July, 2007 on the captioned
subject.
2. It has come to our notice that some of the exporters
are not using their funds obtained from their respective
banks at 7.5% for the purpose of execution of the export
order in violation of the instructions of the State Bank
under EFS as contained in Para 3 of Application/Undertaking
for obtaining loan under EFS. It is also reiterated here
that in terms of BPD Circular Letter No. 14 of July 24,
2006 banks have been advised to ensure utilization of funds
for the purposes the funds are disbursed. Under these instructions
banks are also required to ensure effective internal monitoring
system to prevent diversion of funds for the purposes other
than for which they have been availed. This practice of
the exporters to gain interest arbitrage may attract imposition
of fine; exporters are thus advised to avoid / refrain from
the same. Banks are also advised to ensure that funds obtained
under EFS are not utilized for purposes other than execution
of export orders. However, we shall appreciate if these
instructions are not used as a reason for denying export
finance facility at 7.5% for transactions otherwise eligible
under EFS.
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Yours faithfully,
(Ishtiaq Ali)
Joint Director
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