Please refer to SME&MFD Circular No.03 dated 31st July, 2007 in terms of which procedure for refinance was modified and the banks were, inter-alia, asked to provide funding to the exporters under Export Finance Scheme from their own sources to the extent of 30% during the year ended 30th June, 2008.

2. In order to spur exports as also to ensure availability of adequate refinancing to the commercial banks under Export Finance Scheme, it has been decided to increase the overall quantum of limits for banks under EFS for FY 2008-09 by 25% of the amount outstanding as on 30th June 2008. Accordingly, on an overall basis, SBP would allow limits to the extent of Rs 125 billion to banks under the said Scheme during FY 09 up from Rs 100 billion during FY 08.

3. The above increase in refinancing limits by SBP shall be accompanied with the increase by similar percentage in the share of financing of exports by banks from their own sources, at rates announced under EFS from time to time.

4. The SBP would continue to monitor the utilization of limits sanctioned to each bank for the purpose of proper utilization of the limit. It is to be noted that the entitlement of refinancing shall be curtailed in respect of banks having failed to utilize the limits. Similarly, the banks having shown tendency of less utilization of limits with a view to avoid providing funds from their own sources at rates applicable under EFS shall be penalized under the provisions of the Banking Companies Ordinance, 1962. Banks are, therefore, advised, in their own interest, to refrain from turning down financing requests from exporters who, otherwise, are compliant to the requirements of Export Finance Scheme and lending criteria of the respective bank. The limits to individual banks are being conveyed separately.

5. Other instructions on the subject shall remain unchanged.

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