KARACHI, May 16: Commercial banks have stopped giving refinance facility to leather garment exporters.

The exporters are instead being asked to obtain finance from current financing at 14 to 15 per cent mark-up, said Pakistan Leather Garment Manufacturers and Exporters Association chairman Fawad Ijaz Khan.

Mr Khan said this was resulting in a liquidity crunch to export houses which are already faced with high cost of production.

He alleged that some scheduled banks are even recalling existing refinance facility from exporters.

He said leather garment exporters are mostly SMEs which are finding it difficult to obtain export refinance at State Bank of Pakistan mark-up rate of 7.5 per cent even after providing collateral securities to banks.

The banks are forcing exporters to use costly current finance which is damaging trade.

Mr Khan said that leather garment exporters have orders with them, but high cost of inputs and low prices have compounded their problems.

The Plgmea chief said that genuine exports of leather garments grew by 10 to 15 per cent during July to March of current fiscal year. Therefore, they require additional funding which was not available to them according to their entitlement and limits. The leather garment exporters are already finding it difficult to compete with exporters from China and India and this additional burden of current finance will drive them out of market.

Mr Khan urged SBP governor Dr Shamshad Akhtar to intervene and stop the high-handedness of commercial banks towards SME exporters.