SBP instructs banks to take stock of wheat purchase loans

SBP instructs banks to take stock of wheat purchase loans

The State Bank of Pakistan (SBP) has issued instructions to banks to curb the possibility of private sector procurement and storage of wheat for season 2121.

The other day, the SBP said in a statement that for the participation of the private sector in the wheat procurement season 2021, banks would be required to provide financial assistance to eligible lenders (licensed and flour mills) as follows: The minimum requirements must be strictly met, as confirmed by certain documents or licensed documents. Wheat traders registered with the concerned authority / department).

Banks will only provide financial assistance to eligible borrowers to purchase indigenous wheat for the 2021 harvest season.

Banks will ensure that subject financing is used for the intended purposes only. Special efforts will be made to ensure that the facilities provided for purposes other than procurement of wheat are used to finance the procurement of wheat.

Fresh financial assistance for procurement of wheat will be available in the respective provinces from the beginning of the wheat procurement season 2021. Subsidizing wheat and flour, maize, semolina, etc. against wheat and synthetic products will require a minimum cash margin of 10% of the stock of wheat and the value of the product. Banks will not provide any financial assistance (funded or non-funded) to enable lenders to meet margin requirements.

Financial assistance to the private sector for the purchase of wheat will be provided only against the promise of fresh stock of wheat and compensation for movable or immovable property will not be acceptable for this financial assistance. In addition, the Bank will ensure that borrowers in exchange for wheat stocks have no review of mortgage stocks for the issuance of any different financing amounts for loans already promised to banks. Will not be considered.

Banks will not enjoy any application for grant of fresh loans for purchase of wheat after June 30, 2021. However, banks can provide financing facilities to functional flour mills for procurement of indigenous wheat against the supply of wheat from their authorized representative and the concerned food department.

The quantum of such debt will not exceed the price of wheat provided by the concerned food department or the actual purchase from the wheat traders which is in line with the milling capacity of each mill. Banks will also monitor that the existing stocks of wheat purchased by the concerned functional flour mill remain in the ground and wheat by-products (financial assistance as compared to bank loans) are also on the market to repay the loans obtained. Have been released slowly.

Banks are allowed to provide financial assistance for procurement of wheat through seed processing plants as evidenced by their loan policies and seed processing plants through verification certificates issued by the Federal Seed Certification and Registration Department. According to capacity / production plans. That such storage of wheat will be used for processing purposes.

These loans will be settled positively on or before January 31, 2022.

To prevent the possibility of stockpiling, banks will be required to disclose and verify their storage location, and will strictly monitor wheat stocks, which include periodic inspections of wheat dedicated to the bank. The source is with the client. Gradual release of wheat stocks, so that cash can be generated for the purpose of repaying bank loans.

To prevent the possibility of hoarding, banks will be required to: immediately reverse the progress given to the private sector in the case of hoarding of wheat. Ensure that the client is not allowed any financial assistance for retirement of loans obtained from other banks. And make sure that their clients strictly adhere to the relevant government guidelines for release of wheat stocks and do not engage in any other activity which may lead to speculation of wheat / flour price in the market. May be.

The SBP said that the applicable laws, precautionary rules and other SBP guidelines issued from time to time for lending would be complied with. In addition, the banks will submit a monthly statement to the private sector regarding financial assistance to the private sector for procurement of wheat within ten working days from the end of the month concerned.

The Central Bank said that any violation of the above guidelines would result in disciplinary action under the provisions of the BCO, 1962 and other relevant laws.

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