The
Presidents/CEOs,
All Commercial Banks,
Dear
Sirs / Madam,
PROCUREMENT
OF WHEAT BY THE PRIVATE SECTOR-2007
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: -
a) 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.
b) 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.
c) 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.
d) 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.
e)
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.
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.