The State Bank of Pakistan (SBP) has decided to cut the rate of refinance under the Export Finance Scheme (EFS) by 0.1 percentage points from February 1. This is the second rate cut announced by SBP in a month. Earlier, it had reduced the refinance rate by 0.2 percentage point.

It has been decided that rate of refinance under the Export Finance Scheme applicable from February 01, 2013 and onward will be 8.20% p.a. till further instructions. The commercial banks shall ensure that where financing facilities are extended by them to the exporters for availing refinance facilities under the Export Finance Scheme, their maximum margin/spread does not exceed 1% p.a., according to a circular issued by SBP on Thursday.

The revised reduced markup rate would also be applicable on outstanding loans granted under EFS. Accordingly, banks have been advised by SBP to immediately re-price their outstanding loans granted under EFS, keeping in view the revised reduced markup rate.

Simultaneously SBP BSC offices would also apply reduced markup on outstanding refinance loans granted under EFS. In order to reconcile the position of re-priced loans, banks should submit particulars of outstanding loans re-priced by the bank under EFS on the prescribed format to the concerned SBP BSC office(s) within 10 days from today on Thursday.

The reimbursement of mark-up rate benefit to exporters, on excess performance under Part-II of the Scheme, as specified in SMEFD Circular No.15 dated October 31, 2009, will be adjusted accordingly while keeping in view the revised mark-up rates, the SBP circular added.