Circulars/Notifications - Agricultural Credit Department  
 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.

3. The Chairman, (by Name)
Agricultural Development
Bank of Pakistan,
Islamabad.

2. The Presidents/ Chief Executives (By Name)
Domestic Private Commercial Banks.

4. The Managing Director (by Name),
Federal Bank for Cooperatives,
Head Office,

Islamabad.

Dear Sir, 

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

 Clarifications

  • 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?

  • Please also clarify if the traders, commission agents and other entities are also eligible for financing for procurement of wheat/construction of storage facilities at the same lending rate as is applicable to growers and flour mills?

  • 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.

 


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.

Yours faithfully,
(SYED ISHTIAQ ALI)
Director
       
Home
About SBP
Publications
Economic Data
Press Releases
Circulars/Notifications
Laws & Regulations
Monetary Policy
Help Desk
SBP Videos
Feedback
Contact us
What's New?
Speeches
Online Tenders
Web Links

Educational Resources
Regulatory Returns
Library
Rupey ko Pehchano
Events
Zahid Husain Memorial Lecture
Careers
Sitemap
 
Best view Screen Resolution : 1024 * 768
Copyright © 2016. All Rights Reserved.