KARACHI, Jan 2: Exporters have criticised the State Bank of Pakistan (SBP) for further reducing export refinance limit of individual banks, saying it will adversely affect export trade which is already on the decline.

Shabir Ahmed, chairman, Pakistan Bedwear Exporters Association (PBEA), said the SBP had last year launched a scheme of 70:30 funding by the State Bank and the scheduled banks after freezing export refinance limit of banks.

As a result of the freezing of individual banks limit for export refinance, he said there was a squeeze of funds for export trade.

Citing an example, he said if a bank limit for refinance stood at Rs1 billion, but the actual utilisation of fund was at Rs800 million on June 30, the limit had been frozen at the lateral figure.

“This means that the SBP has already reduced the limit by 20 per cent of the banks by freezing the amount.”

Subsequently, he said on Dec 31, the export refinance limit was reduced further by 15pct of individual banks which means that its impact further dwindled the availability of funds to Rs680m.

Strongly criticising the SBP’s Tuesday decision of further slashing the limit by 15 per cent from Jan 1, 2008, he said it means lesser funds would be available for export trade.

If the earlier example is again taken into account, this would mean that an individual bank with a limit of Rs1 billion on June 30, 2007, would now have funds of only Rs578 million after the impact of further reduction of 15 per cent, he added.

He said the SBP governor had promised to exporters to increase the limit after going into trial and error of the 70:30 funding of export refinance scheme last year, but instead it was being done contrary to what had been committed.

Shabir Ahmed complained that the SBP governor was not meeting business leaders and had instead closed doors on exporters and was taking all decisions unilaterally which was damaging industry and exports.

As a result of such decisions, he said, bank profits are going high, and so is the capital market where paper profits are made.