a) The Banks will be free to determine the rate of mark
up on their lending to the private sector for the purpose
of wheat procurement depending upon the risk profile of
each borrower. As the lending to the government agencies
for wheat procurement is secured against the government
guarantee, it is expected that the mark up rate for the
private sector would be in excess of the rates charged
by banks to the government agencies.
b) The bank may fix margin requirement as low as 10% of
the value of the wheat stock. However, the banks shall
provide no financial facilities (funded or un funded)
to enable the borrowers to meet the margin requirements
c) The loan provided to the private sector shall be repayable
on or before 31st January 2006.
d) Banks will continue to submit a weekly statement in
respect of financing to private sector for wheat procurement
as per the format already in use.
e) The lending shall be in compliance with the applicable
Prudential Regulations.
The
banks are also allowed to provide facilities for wheat
procurement by the seed processing plants, keeping in
view their lending policies and the capacity / production
plans of the seed processing plants.
Please
acknowledge receipt.