WHEAT
PROCUREMENT BY THE PRIVATE SECTOR
It
has been observed that storage facility for wheat is inadequate
in the country since a long period, as such there is need
to enhance the said facility as wheat is always on the top
of major crops of our country.
For procurement of such important food item, the
Governor, State Bank of Pakistan, has been pleased to allow
the banks to provide adequate funds / financing as agricultural
loans for a period upto 5 - 7 years to eligible flour mills
and farmers for the construction of silos and other structures
that can serve as storage area for procurement of wheat
at a debt equity ratio of 60:40
(Bank:Borrower)
and 12% mark-up rate.
The lending rates shall subsequently be made market
based on their linkage with rate on T. Bills.
The banks would ensure that the transactions are
viable and their exposure is secured adequately. For the purpose, the Ministry of Food, Agriculture & Livestock
(MINFAL) would develop standardized models for construction
of storage facilities (of various sizes and types) making
it possible for banks to concentrate on mitigating credit
risk of the borrowing entity.
Further, the storage financing would be counted towards
achievement of Mandatory Agricultural Credit Targets of the banks on the basis of the outstanding
stocks every year, as it would primarily be for long-term
basis. However,
the banks should ensure that the storage facility would
be used at maximum level only for procurement of wheat by
the borrowers.
Further,
it is advised that the banks should submit this Department
a separate statement i.e. Proforma ‘G’ on monthly basis
showing necessary details of agricultural financing disbursed
for wheat storage facility on or before 15th
of the following month for the month it pertains on regular
basis. The
first statement on Proforma ‘G’ for the month of January,
2002 should reach this Department on or before 20th
February, 2002. In
future the same must reach us by 15th of each
month.
Please acknowledge receipt.