The State Bank of Pakistan officially announced on Tuesday that banks and authorised dealers would not receive Research and Development (R&D) subsidy claims of textile and other sectors after June 25, 2008 and instructed field offices not to make payment of subsidies after June 30, 2008.
Sources said that this step has been taken in consultation with the Finance Division, as the ministry has not allocated any amount for R&D subsidies in next fiscal year. During FY08, the Finance Division allocated some Rs 19 billion for R&D support to textile sector. Although R&D support scheme is being expired on June 30, 2008 the SBP has announced that after June 25 no claim would be entertained.
The SBP has issued a circular number FEOD 20679 /24/R&DS-103-08 to all banks and authorised dealers on June 23, 2008, in which the bank has instructed exporters to lodge claims till June 25, 2008.
The SBP said that in the consultation with ministry of finance it has decided that cut-off date for receiving all R&D support claims from textile exporters as well as importers of fertiliser and others is 25-06-08 for current financial year 2007-08.
Claims received up to June 25 will be paid by June 30, 2008 if otherwise in order and after June 30, SBP BSC (bank) field offices will not make payment of the subsidy amount directly to any beneficiary, the central bank directed.
The SBP said that from the next financial year, the Finance Division will release necessary sanction/authorisation/approval to SBP/AGPR for subsidy payments. In addition, all payments of subsidy claims duly confirmed/verified by SBP BSC (bank) field office will be considered for payment on receipt of authorisation of the Finance Division.
After receiving the debit authority from the Finance Division, SBP BSC (bank) field offices can debit the government accounts for payment of subsidies under intimation to the Finance Division and AGPR, the SBP said.
In view of the above, all authorisation dealers have been advised to inform exporters accordingly, the central bank instructed and added that further details abut the issuance of amended SROs being released by concerned ministries will be conveyed in due course of time.
On the other hand exporters have strongly criticised the SBP decision and have demanded extension in the claim submission date. Meanwhile, Pakistan Apparel Forum Chairman Jaweed Bilwani said that as per the SRO issued by the ministry of finance, R&D support programme is being ended on June 30, 2008 and all shipments during the current fiscal year are eligible to get R&D subsidy.
He said if banks follow the SBP instruction then exporters, who have made their export shipments between June 25 to June 30, would not get R&D support. Aijaz Khokhar, former chairman of Pakistan Readymade Garments Manufacturers and Exporters Association also criticised the SBP move saying the SBP circular was received on June 24 by the upcountry exporters and it is not possible for them to submit claims in a single day. This step would cause millions of rupees losses to exporters, who are already facing numerous problems, Aijaz said.