The Presidents/Chief Executives
All Banks/DFIs

Dear Sirs/Madam,

MARGIN RESTRICTIONS FOR FINANCING AGAINST
THE SECURITY OF SUGAR STOCK (BOTH RAW AND REFINED)

With a view to discourage hoarding of sugar and to ensure stability in its prices, it has been decided that with immediate effect:

a) The banks shall ensure that all advances against the security of sugar stock are fully adjusted latest by 31st July 2006 and renewals/fresh disbursements of such advances are made only after a clean up period of at least one month. It is clarified that all renewals/fresh disbursements henceforth will be subject to 50% cash margin requirement stipulated at point ‘b’ below.

b) To impose a cash margin of 50% on all fresh disbursements to be made by banks against the security of sugar stocks. The banks should not finance the cash margin themselves.

c) That State Bank shall monitor the situation closely and for this purpose, the banks shall report all such advances to State Bank of Pakistan on fortnightly basis as per format attached with this circular.

Please acknowledge receipt.

Encl: As above