KARACHI, Jan 1: Rate of refinance under Export Finance Scheme and service charges on various other schemes have been reduced.

It was the first reduction after the announcement of the discount rate cut in the second week of December.

The revised reduced markup rates would also be applicable on outstanding loans granted under EFS which would be a great relaxation for exporters.

The reduction was expected, but it was also noted that available export financing were not fully utilised by exporters since money was still costly in the wake of low inflation.

In the first two months of the current fiscal year, exporters made a net retirement of Rs16.4 billion instead of making fresh borrowings.

The rate of refinance under the EFS has been reduced by 0.2 per cent to 8.30 per cent per annum. Exporters would now get financing facility from banks at 9.30 per cent while service charges under the Long Term Financing Facility (LTFF) have been reduced by 0.7 per cent for financing up to three years and by 0.2 per cent for financing up to five years.

However, service charges for financing up to 10 years have been raised by 0.2 per cent.

The State Bank reduced the refinance rate and service charges on its various financing schemes with the exception of financing for over five years and up to 10 years.

The service charges under the scheme for Financing Power Plants Using Renewable Energy have also been reduced by 0.2 per cent for financing up to five years.

In January last year, the State Bank had decided that banks and DFIs can also consider financing requests of sponsors for setting up power projects up to a maximum capacity of 20MW in cases where only Biomass or Biogas is used as renewable energy source. Earlier, under the scheme which was announced by the SBP in December 2009, financing facility was allowed for establishment of new power projects using renewable energy with a capacity of up to 10MW.

The revised reduced markup rates would also be applicable on outstanding loans granted under EFS. Banks were advised to immediately re-price their outstanding loans granted under EFS, keeping in view the revised reduced markup rate.

In order to reconcile the position of re-priced loans, banks were advised to submit particulars of outstanding loans re-priced by the banks under EFS within 10 days from Jan 1, 2013.

The State Bank’s another circular said that effective Jan 1, rates of service charges for Participating Financial Institutions (PFIs) and rates for end users under the Long Term Financing Facility would be different.

For up to three years, the PFI spread would be 1.5 per cent that makes it 10.30 per cent for end users.

For over three years and up to five years, the PFI’s spread would be 2.5 per cent that makes 10.9 per cent for end users while over five years and up to 10 years PFI spread would be three per cent to make it 11.4 per cent for end users.

Similarly, under the Scheme for Financing Power Plants Using Renewable Energy, banks and DFI spread would be 2.5 per cent up to five years that makes it 10.9 per cent for end users.

For over five years and up to 10 years, banks’ spread is 3 per cent which makes it 11.40 per cent for end users.