KARACHI, Feb 25: The State Bank of Pakistan has decided to refund fines totalling Rs2.354 million imposed on commercial banks for availing refinancing facilities under the defunct scheme of Long Term Financing for Export-Oriented Projects (LTF-EOP) without valid limits in the first quarter (July-September) of the current fiscal year (2007-08).

According to a press release issued by the SBP here on Monday, the central bank also asked the banks to refund these fines to the respective exporters.

No limits were sanctioned under LTF-EOP for 2007-08 for the import of plant and machinery and the scheme was withdrawn in October last year.

Subsequently, banks development finance institutions (DFIs) were allowed to avail refinance facility against letters of credit (LCs) opened by banks during 2006-07 and retired or to be retired after June 30, 2007.

“However, due to some misunderstanding, banks inadvertently released refinance to their various clients without valid limits,” said the SBP, adding that banks and DFIs had approached the central bank for refund of fines saying that the SBP instructions were not violated intentionally but were misunderstood.

‘The State Bank has now decided to refund the fines recovered from banks. The State Bank has also asked the banks to ensure that the fines refunded to them by it (SBP) should be passed on to the respective exporters.”