RATE OF MARKUP FOR COMMODITY OPERATIONS OF THE GOVERNMENT
AND THEIR AGENCIES

 

Please refer to our BPD Circular No. 04 dated 15th February, 2003 on the captioned subject.

The markup rate for financing to the Federal/Provincial Governments and their agencies by the banks under COF was fixed by the SBP from time to time and last revision was made in February 2003. Subsequently, in order to encourage transparency, promote consistency in the market based pricing and improved management of the market risks undertaken by the banks, all the banks/DFIs were advised by SBP vide BPD Circular No.1 dated 21-01-2004 to use KIBOR of different tenors as a benchmark rate for determining pricing of all Rupee based Corporate/Commercial lending to their clients.

In view of the foregoing, it has been decided that, henceforth, the markup rate for financing provided by the banks to the Governments and their agencies under commodity operations shall be negotiated bilaterally on the basis of KIBOR of relevant tenor. Further, the instructions issued to banks vide BPD Circular No.04 dated 15-02-2003 through which markup rate of 9.5% was fixed by SBP for COF have been withdrawn.

Please acknowledge receipt.