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Saturday Jul 15 2017
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First loans to farmers with crop as collateral disbursed

KARACHI: The first-ever loans by a leading Pakistani bank to farmers with crop as collateral have been disbursed in the Muridke area of district Sheikhupura.

The loans were disbursed after an effort by the non-profit Pakistan Agricultural Coalition.

The bank disbursed loans worth Rs3.7 million against 185 tonnes of wheat to two farmers.

The wheat was placed in a warehouse operated by a private logistics company after testing. 

The stocks are under pledge to HBL at Pakistan Mercantile Exchange. Mahmood Moulvi, Chairman M.M Flour Mills, has committed to purchase the stock.

PAC Chief Executive Arif Nadeem said that this is the birth of a new era for Pakistan’s farmers as the warehouse receipts business model has now been adapted to the Pakistani environment. 

The system can not only improve financial inclusion of farmers but also farmers’ market access, protection of crop quality, price stability, and ultimately export competitiveness and food security.

Nadeem noted that this effort is a pilot initiative for an eco-system based on Collateral Management Regulations 2017, championed by the Securities and Exchange Commission of Pakistan (SECP) for which the State Bank of Pakistan is developing a framework. 

The PAC chief executive acknowledged SECP’s commitment to the development of the commodities market and the excellent support by the SECP in terms of guidance and help in developing the sector.

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