State Bank of Pakistan has instructed banks not to provide financing for retirement of wheat procurement loans to avoid hoarding of wheat. In this regard SBP on Thursday issued MFD Circular Letter No 01 to the heads of banks.
SBP has said that banks are aware that instructions have already been issued to ensure retirement of the loans granted by them for procurement of wheat during 2007, latest by 31st January 2008 as contained in SMED & MFD Circular No 01 dated 26-01-2007, read with MFD Circular Letter No 06 dated 11-12-2007.
Banks shall also ensure that private sector borrowers including flour mills are not accommodated to provide financing facilities for retirement of the loans availed by them from other banks for wheat procurement to avoid hoarding of wheat, SBP added.
SBP has said that any violation of SBP instructions would attract penal provisions under BCO, 1962. "This step has been taken to control soaring prices of wheat and discourage the flour mills from hoarding wheat," a banker said. He said that SBP already has instructed banks to ensure that funds provided under wheat financing to private sector are not rolled over and are adjusted as per terms and conditions of loans on or before 31st January, 2008.