KARACHI - To facilitate exporters and authorised dealers, the State Bank of Pakistan (SBP) has relaxed the existing policy regarding settlement of outstanding loans against exports.

The SBP has delegated powers to authorised dealers to settle outstanding export loans valuing up to $50,000 (or equivalent in other foreign currencies) themselves through interbank market. The settlement of outstanding loans exceeding the above limit shall, however, require prior approval of the SBP.

It is pertinent to mention here that the foreign exchange regulations was allowing the authorised dealers (banks) to use foreign currency deposits for extending foreign currency trade loan facility to exporters and importers. These regulations, however, allow settlement of such loans against exports only through realisation of export proceeds or remittances from abroad.

In cases where export proceeds were not realised for any reason including non-performance of export contracts or circumstances leading to cancellation of export contracts after partial performance etc, such loans remained unsettled. Resultantly, authorized dealers were constrained to retain the above foreign exchange liabilities on their books of accounts.