All
Commercial Banks,
Dear
Sirs / Madam,
PROCUREMENT
OF WHEAT BY THE PRIVATE SECTOR-2006
With
a view to encourage the participation of the private sector
in wheat procurement, it has been decided that the banks
may provide financing facilities to their eligible borrowers
(licensed wheat traders and the flour mills) for procurement
of indigenous wheat only during the wheat procurement season
2006, subject to the following conditions: -
a)
The banks will be free to determine the rate of markup 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 markup rate for the private sector would be in
excess of the rates charged by banks to the government agencies.
b)
The banks may fix minimum margin requirement of 10% of the
value of the wheat stock. However, the banks shall not provide
any financial facilities (funded or non- funded) to enable
the borrowers to meet the margin requirements.
c)
The loans provided to the private sector will be for the
procurement of indigenous wheat only and
shall be repayable on or before
31st January, 2007 positively.
d)
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.
e)
Banks shall ensure that the loans provided under the wheat
procurement policy 2005 have been adjusted as per terms
of BPD Circular No.17 dated 27-04-2005. The fresh financing
to the eligible borrowers for procurement of wheat during
2006 shall start from commencement of wheat procurement
season 2006 in the relevant provinces and/or arrival of
new crop in the market.
f)
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.
g)
The lending shall be in compliance with the Prudential Regulations
and other instructions of SBP issued from time to time.
Please
acknowledge receipt.