KARACHI, Oct 30: Banks will continue to charge maximum markup of 3 per cent on the export financing to the eligible exporters in November 2003 as the State Bank has left its export refinance rate unchanged at 1.5 per cent.

The central bank issued a circular to all banks on Thursday informing them that the export refinance rate of 1.5 per cent will continue to be applicable for the month of November. “The commercial banks shall, however, ensure that where financing facilities are extended to them to the exporters for availing refinance facilities under the Export Finance Scheme, their maximum margin/spread does not exceed 1.5 per cent per annum,” the circular said. Cutting through the jargons it means that the banks will charge maximum 3 per cent markup on export financing in November and will get reimbursement from the State Bank against such financing at 1.5 per cent thereby earning a margin of 1.5 percent.

The central bank determines the export refinance rate on monthly basis and uses the weighted average cut-off of the six- monthly treasury bills for this purpose. Currently the weighted average yield on six-monthly T-bills is at 1.60 percent.

The circular said that the financing under part B (export sales) of the scheme for financing locally manufactured machinery (LMM) shall also attract similar markup structure.