Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular Letter No. 7 of 2019
October 18, 2019

The Presidents/Chief Executives,
All Banks/DFIs

Prudential Regulations For Small & Medium Enterprises Financing Electronic Warehouse Receipt

Dear Sir(s) / Madam(s),

Please refer to IH&SMEFD Circular No. 09 dated December 22, 2017, whereby revised Prudential Regulations for SME Financing were issued.

2. In order to provide enabling regulatory framework for channelizing financing to develop an efficient and standardized infrastructure for the storage of commodities, inter alia, to reduce spoilage of produce, following amendments in the Definition and Regulation SME R-1 of Prudential Regulations for SME Financing have been incorporated regarding Electronic Warehouse Receipt under Collateral Management Companies Regulations, 2019 issued by the SECP.

Definition of Important Terms (Annexure-V):

Readily Realizable Assets means and include liquid assets and stocks pledged to the banks & DFIs in possession or stock pledged under Electronic Warehouse Receipt (EWR) as defined in Collateral Management Companies Regulations 2019 issued by the SECP, with ‘perfected lien’ duly supported with complete documentation.

SME R-1: SME Specific Credit Policy:

vi) The policy shall cover different aspects related to financing against pledge of stock under EWR including list of eligible commodities, quality of collateral, valuation, price volatility, margin, limits, tenor of loans, diversification, insurance, substitution of collateral and managing collateral in the event of counter party default, etc.

3. The above changes in regulations are applicable with immediate effect. Banks & DFIs are advised to ensure circulation of these regulations among all their offices/ branches for meticulous compliance in letter and spirit. Non-compliance of Prudential Regulations will lead to punitive action under the relevant provisions of BCO, 1962.

Yours sincerely,

(Ghulam Muhammad)


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