KARACHI, June 25: Banks may continue to avail export refinance from the State Bank till their new limits are finalized for the next fiscal year or by end of September 2003 — whichever date is earlier. This has become possible as the SBP has decided to allow extension in the export refinance limits set for the banks till finalization of new limits.

The SBP told all banks through a letter issued on Wednesday that they too may allow the exporters to continue to avail their limits for seeking export finance under part II of Export Finance Scheme up to August 31, 2003.

The central bank extended the present limits of the banks for getting export refinance and also allowed them to extend the limits they have set for the exporters because these limits are due to expire on June 30 — and new limits have not been finalized.

The reason is that under the present system the exporters are required to submit a key statement for the year 2002-03 duly verified by the SBP Exchange Policy Department by August 31, 2003.

“Thus the banks shall not be in a position to work out revised entitlement for each exporter,” says the SBP letter (BPD No 20).

Under the SBP export finance scheme, eligible exporters get concessional finance (at the rate of T-Bills yield plus 1.5 per cent) from banks and the SBP reimburses the amount after allowing a half percentage point spread to the banks. Part II of the scheme is so designed that the exporters have to show a minimum prescribed export performance in the preceding year to seek new financing for the next year.

“As the facility under part II is self regulating exporters shall continue to be required to foresee their export earnings during 2002-03, work out their own estimate as to the quantum of their entitlement for 2003-04 and should accordingly adjust their existing borrowing on or before end-June 2003 to avoid utilization of excess facilities under the scheme during the period of rollover.”

Over-utilization of export financing may attract fine under the rules. “Each bank shall be under obligation to explain this requirement to its constituent exporters who have been availing part-II facilities from it,” says the State Bank letter.