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Export financing rate further cut to five percent

KARACHI (February 28 2003) : The State Bank of Pakistan (SBP) on Thursday has announced further cut in the export financing rate under the Export Finance Scheme.

The SBP said a cut of 0.5 percent has been introduced to bring the rate under the Export Finance Scheme as 5 percent per annum while earlier, it was 5.5 percent.

It said the rate under the export finance scheme has been brought down to 5 percent from 13 percent in July 2001.

“It has been decided that the rate of refinance under the Export Finance Scheme applicable for the month of March 2003 will be 3.5 percent per annum.

“The commercial banks will ensure that where financing facilities are extended by them to the exporters for availing refinance facilities under the Export Finance Scheme, their maximum margin or spread does not exceed 1.5 percent”, said the SBP.

The financing facilities under Part-B (export sales) for the scheme for financing locally-manufactured machinery will also attract similar mark-up rate structure.

The banking sources said due to surplus liquidity in the market and extremely low rates in the money market, exporters can get credits from any bank at 6 percent per annum.

Some bankers said the presence of surplus liquidity and unavailability to invest the liquidity is causing loss to the banks.

They find it difficult to pay a 'reasonable' return to their depositors.

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