Banks to provide Rs 144 billion for wheat procurement

Banks have agreed to provide Rs 144 billion financing for wheat procurement to Passco and provincial food departments during the current season. Sources in banking sector told Business Recorder on Tuesday that earlier banks were reluctant to provide lending for wheat procurement to government institutions for the current wheat season, as Pakistan Storage and Supply Corporation (Passco) and provincial food departments have not retired financing acquired during the last wheat procurement season.
They said that the government institutions had failed to offload their wheat stock procured during last season due to low demand and declining commodity prices in the domestic market, of which banks are facing huge difficulties in recovery of outstanding credit disbursement.
"Banks had disbursed Rs 277 billion for wheat procurement during last season, out of which so far only Rs 85 billion has been retired by the borrowers," they added. Therefore, banks were reserved to grant new financing for wheat procurement and asked Passco and food departments for retirement of previous amount. Ministry of Finance had also held several meetings with the State Bank of Pakistan for wheat financing issue and finally on the central bank's intervention, 20 banks have agreed to provide financing for wheat procurement during the current season, they said.
"So far these banks have committed to disburse Rs 144 billion for wheat procurement for about 7 million tons of wheat," sources said. However, they said that the committed amount is Rs 34 billion less than the demand raised by the provincial food departments and Passco, which required Rs 179 billion.
Passco requires Rs 38 billion, Punjab food department Rs 95 billion and Sindh food department Rs 36 billion, while food departments of NWFP and Balochistan require Rs 10 financing. Following the directives of the central bank, several banks have started credit disbursement for wheat financing in Sindh and Punjab, where wheat procurement has already started. Banks have disbursed about Rs 4.5 billion.