Please refer to AC&MFD Circular No. 01 of 2014 dated Jan 29, 2014, whereby revised Prudential Regulations for Agriculture Financing were issued.
2. In order to provide enabling regulatory framework for channelizing financing to develop an efficient and standardized infrastructure for the storage of commodities, inter alia, to reduce spoilage of produce, following amendments in the Part-A: Definitions 20 (ii) and Regulation R-1 of Prudential Regulations for Agriculture Financing have been incorporated regarding Electronic Warehouse Receipt under Collateral Management Companies Regulations, 2019 issued by the SECP.
Part A – Definitions:
20 (ii) Other Form of Security means hypothecation of movable agricultural machinery, pledge/ hypothecation of agriculture produce on the farm or in godown, and charge on livestock on the farm. In case of pledge/ hypothecation of agriculture produce lying in godown, the title/ownership of the produce in the name of the borrower shall be determined based on appropriate documents, for example Electronic Warehouse Receipt (EWR) as defined under Collateral Management Companies Regulations 2019 issued by the SECP.
Part B - General Regulations:
Regulation R-1: Comprehensive Agriculture Financing Policy
viii) The policy shall cover different aspects related to financing against pledge of stock under EWR including list of eligible commodities, quality of collateral, valuation, price volatility, margin, limits, tenor of loans, diversification, insurance, substitution of collateral and managing collateral in the event of counter party default, etc.
3. The above amendments in Prudential Regulations shall be applicable with immediate effect. Banks / DFIs are advised to ensure meticulous compliance of revised instructions in letter and spirit. Any deviation or non-compliance of Prudential Regulations shall attract punitive action under the relevant provisions of Banking Companies Ordinance, 1962.