To allow the participation of the private sector in wheat procurement, banks may provide financing facilities to their eligible borrowers (licensed wheat traders and the flour mills) for procurement of indigenous wheat only (for fresh wheat crop 2007) during the wheat procurement season 2007, subject to the following conditions: -
Banks will determine the rate of markup on lending to the private sector for the purposes of wheat procurement depending upon the risk profile of each borrower. As lending to the government agencies for wheat procurement is secured against government guarantee, it is expected that the related markup rate would be competitive in comparison to the rate charged to the borrower in private sector.
Banks may fix minimum margin requirement of 10% of the value of the wheat stock. However, banks shall not provide any financial facilities (funded or non- funded) to enable borrowers to meet the margin requirements.
Loans provided to the private sector will be for the procurement of indigenous wheat only and shall be repayable on or before 31st January, 2008 positively.
Banks are also allowed to provide facilities for wheat procurement by the seed processing plants, in line with their lending policies and the capacity/production plans of the seed processing plants.
Banks shall ensure that the loans provided under the wheat procurement policy 2006 have been adjusted as per terms of SMED Circular No. 05 dated 14-03-2006. Fresh financings to the eligible borrowers for procurement of wheat during 2007 shall start from commencement of wheat procurement season 2007 in respective provinces, on arrival of new crop in the market.
Banks will continue to submit a weekly statement in respect of financing to private sector for wheat procurement as per the prescribed format already in use.
The lending shall be in compliance with the Prudential Regulations and other instructions of SBP issued from time to time.
