KARACHI, July 24: The State Bank of Pakistan (SBP) may revoke the concessionary scheme of export refinance and instead ask the scheduled banks to arrange funds from their own source for the export trade, business circles said on Tuesday.

After exhausting funds meant for the export refinance scheme most of the banks are now refusing funds to their clients (exporters) under the scheme. “The usual reply coming from our bankers is that we have burst our ceiling given by the SBP, therefore, export refinance could not provided,” lamented a leading exporter of readymade garments.

There are strong indications that the State Bank of Pakistan (SBP) is going to scrap the export refinance scheme and instead will shift the responsibility to the scheduled banks to arrange funds, Pakistan Bedwear Exporters Association (PBEA) Chairman Shabir Ahmed said.

It is also being alleged by the exporters that most of the funds allocated towards export refinance scheme by the SBP had been used by the banks for swapping Long Term Finance.

Shabir Ahmed quoting bankers said that an agreement between the SBP and the scheduled banks had been reached for shifting the disbursement of export refinance to the later. He further said that there were strong rumours that in a couple of days a notification in this regard would be issued.

He said that commercial banks will provide funds to the export trade as the running finance at an average mark-up rate close to existing refinance rate of 7.5 per cent and the SBP would pay 2.5 per cent to the banks as rebate.

Pakistan Hosiery Manufacturers Association (PHMA) chairman Naqi Bari said that by adopting this method the SBP was shifting its responsibility to commercial banks, which would ultimately charge higher mark up from the exporters.

He further said that already many commercial banks were levying service charge on funds taken under Part-11 of the export refinance scheme. Textile exports, which constitute around 65 per cent of total exports, are under tremendous pressure owing to tough competition from regional countries and shifting of export refinance scheme to commercial banks would further aggravate the situation, Mr Bari maintained.

Former chairman Korangi Association of Trade and Industry (Kati) said that if the SBP allowed the commercial banks to handle export refinance this would mean that the banks would be fixing their own mark up rates and would also dictate their terms and conditions.

Consequently, he apprehended that this would further damage textile exports and the industry, which was already under burden of high mark up rates and utilities cost, would be doomed.