Circular
Letter No. ACD/ 1491-1511 /PD(P)-08/2002 |
June10, 2002 |
1.
The Presidents (By Name)
ABL / HBL / MCB / NBP / UBL
Head / Central Office,
Karachi.
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3.
The Chairman, (by Name)
Agricultural Development
Bank of Pakistan,
Islamabad.
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2.
The Presidents/ Chief Executives (By Name)
Domestic Private Commercial Banks.
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4.
The Managing Director (by Name),
Federal Bank for Cooperatives,
Head Office,
Islamabad.
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Dear
Sir,
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WHEAT
PROCUREMENT BY THE PRIVATE SECTOR
Please
refer to ACD Circular No. .01/ PD(P)-08/2002 dated the 16th
January, 2002 read with BSD Circular letter No. 33 dated
the 3rd December, 2001 regarding disbursement
of Agricultural Loans by the banks to the farmers / flour
mills for construction of wheat godowns / silos in the country
and deregulation of Wheat Trade.
In
this connection certain points were raised by the banks
while implementing the provisions of the above circulars.
These points have been examined and following clarifications
are issued for the guidance of the banks: -.
Points
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Clarifications
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-
It
is not clear from the above referred circulars
as to what rate of mark-up should be applied on
financing for construction of storage facilities,
as the BSD Circular has advised charging of markup
at normal lending rate whereas the ACD Circular
has advised 12 % rate of markup which will be
subsequently made market based?
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-
Banks
are allowed to provide financing facility to private
sector for wheat procurement at markup rate of
12 % p.a. as already advised, vide BSD Circular
letter No. 33 dated the 3rd December,
2001.However, financing for a maximum period of
7 years can also be provided by the banks for
construction of silos and other structures that
can serve as storage area for wheat at a debt
equity ratio of 60:40 at normal lending rates.
-
The
Wheat Traders who are involved in procurement
of wheat are also eligible for availing financing
facility for procurement of wheat at 12% p.a.
markup rate, vide No. BPD (RU-50)/911(16)/5449/2002
dated the 12th April, 2002.
Wheat
Traders are also entitled to avail financing facilities
for construction of storage facility for wheat at
normal lending rate as already advised,
vide BSD Circular letter No. 33 dated the 3rd
December, 2001.
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Further
it is clarified that the
financing for procurement of wheat by the banks to private
sector shall be treated under Commodity Operations and it
will not be counted towards Mandatory Credit Targets of
banks for agricultural credit. Only the credit for construction of silos and other structures
for storage of wheat shall be counted towards Mandatory
Credit Targets of banks.
It
is also clarified that the financing for wheat procurement
by the banks to private sector (flour mills / traders of
wheat) would not be against the cash credit limits fixed
by the Finance Division for Commodity Operation Financing
of the Government and their agencies.
The said financing would be the normal lending of
the banks in the light of their own lending policy.
Please
acknowledge receipt.
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Yours
faithfully,
(SYED ISHTIAQ
ALI)
Director |
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