As
your are aware that there has been a shift in the Government
Policy for procurement/import of essential commodities including
wheat to the market mechanism wherein the Government has decided
to entrust the work relating to wheat procurement and storage
to the private sector. In this regard, the Government as also
SBP is taking all measures for the smooth transition of the
business from the public sector to private sector, especially
for wheat procurement and storage capacity. It has been noted
that at present, the private sector does not have the required
resources for procurement and storage of wheat. To ensure
that the transition to procurement of wheat by private sector
is accomplished smoothly, without causing any inconvenience
to the general consumers, following guidelines are issued
to banks for providing financial facilities to private sector
for wheat procurement/storage:
i.
The banks will provide credit to private sector for
wheat procurement under Commodity Operations at 12% mark up
rate to the eligible flourmills for the initial year. The
lending rates shall subsequently be made market based on their
linkage with rates on T-Bills.
ii.
In order to assess the credit risk, the banks would
have a direct interaction with the borrowers and the Flour
Mill Association would ensure cooperation in this regard so
that banks are able to complete their credit approval / appraisal
process and legal documentation required for this purpose.
iii.
For the purpose of enhancement in the wheat storage
capacity in the private sector banks will provide adequate
funds for a maximum period upto 7 years for the construction
of silos, and other structures that can serve as a storage
area for wheat at a debt equity ratio of 60:40 at normal lending
rates. The banks would ensure that the transactions are viable
and their exposure is secured adequately. The banks may like
to approach Ministry of Food Agriculture & Live Stock
(MINFAL) who would prepare standardized models for construction
of storage facilities (of various sizes / types).
Please
acknowledge receipt.
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