Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular No. 01 of 2014
March 04, 2014

The Presidents/CEOs/Country Managers,
All Banks,

Dear Sirs/ Madam,

Mechanism to Facilitate Utilization of Export Finance Scheme
(EFS) by Small and Medium Enterprises (SMEs)

As you are aware that State Bank of Pakistan is providing refinance facilities under the Export Finance Scheme in order to fulfill the financing needs of exporters and to promote the exports of the country. However, it has been observed that most of the banks are not providing sufficient financing to Small and Medium Enterprises (SMEs) under the Export Finance Scheme. In order to further improve utilization of Export Finance Scheme (EFS) for SMEs, following additional incentives for banks and exporters are being made available:-

i. Banks’ Spread in EFS mark-up rate is being enhanced from 1% to 2% for SME borrowers only. Therefore, the banks can charge spread of 2% (currently 1%) under the Scheme against lending to SMEs from the date of issuance of this circular without changing prevailing end user rate. SBP refinance rate will be adjusted accordingly.

ii. The performance based mark-up rebate under EFS Part-II has been linked with export performance. Exporters can avail mark-up rate rebate ranging from 0.5 – 1.5 percentage points depending on the level of export performance achieved. To encourage SMEs to enhance their exports, incentives of mark-up rebate have been increased for SMEs by 0.5 percentage point as compared to corporate exporters as under:-

Performance Requirement Mark up Rate Rebate Other than SME Borrowers Mark-up Rate Rebate for SME Borrowers
2.00 to 3.00 times Standard EFS Rate Standard EFS Rate
3.01 to 4.00 times 0.5% p.a. 1.0% p.a.
4.01 to 5.00 times 1.0% p.a. 1.5% p.a.
Above 5 times 1.5% p.a. 2.0%p.a.


The performance based mark-up rate rebate will be allowed to high performers of SME borrowers against achievement of high export performance during FY 2013-14 and onward.

iii. Banks limits under EFS will be linked with utilization of the available limit for SMEs and banks shall allocate at least 10% of their limit for SMEs out of the total limit available under EFS. Accordingly banks can extend financing to corporate exporters upto a maximum of 90% of the limit to be sanctioned by the SBP for each financial year. However, new limits of banks will be adjusted in a way that existing utilization of corporate borrowers is not reduced. A reasonable transition period is allowed to the banks to adjust their limits against corporate client. SBP BSC Offices will start implementation of this new mechanism w.e.f. 1st July, 2015. Further, there will be no cap on utilization of bank’s limit under EFS for SMEs. However, banks should continue to follow the regulations regarding maximum exposure against a single SME prescribed under Prudential Regulations for SMEs.

2. Any bank claiming refinance facility against financing provided to SMEs will be required to give a certificate as per specimen attached herewith, in order to ensure that refinance is being claimed for SMEs only. Moreover, banks should mention “Application for SME” on the top of Refinance Claim Form under Part-I & II of the Scheme and all other relevant documents to be submitted by banks/exporters to SBP BSC (Bank), Office, should also be marked with “For SME” on the top of each document.

3. Other instructions on the subject shall remain unchanged.

Encl: One

Yours Sincerely,

(Syed Samar Hasnain)

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