The Federal Government is likely to compensate rice millers and traders in Sindh and Balochistan by around Rs 250 million on account of losses incurred by these businesses due to floods. Affected growers and haris were earlier compensated with write-off of loans provided by commercial banks and Zarai Taraqiati Bank (ZTB).
The State Bank of Pakistan (SBP) has now asked financial institutions to provide details of loans provided by them to rice millers and traders in the flood affected areas of Sindh and Balochistan. A circular letter, issued by the SME department of SBP, while referring to Finance Division's letter No F.10 (21)2010/Bkg.III-200 dated 20th January 2012 on the captioned subject "Write Off of Outstanding Loans against all Sindh Baluchistan rice millers and traders, issued directives to the presidents/CEOs of five banks.
The circular letterstates: "Please furnish us position of outstanding loans of Rice Millers and Traders (Only SMEs) of Flood Affected Areas of Sindh and Balochistan, as notified by National Disaster Management Authority, list of which was circulated vide SMEFD Circular No 16/2010, duly countersigned by Internal Audit Head of your Bank or his authorised representative not less than the rank of SVP or equivalent. Above information/data may be furnished latest by February 03, 2012."
The SBP circular is based on an earlier decision taken by ECC which as under: "A summary for the Economic Co-ordination Committee (ECC) of the Cabinet, regarding "Write-off of Loans Outstanding against All Sindh Balochistan Rice Millers and Traders" was moved by Finance Division on 2nd January, 2012. The same was considered by ECC on 3rd January, 2012 and decided as follow:
i. That 50 percent of the outstanding loans, including mark-up of the rice millers and traders should be picked up by the Government of Pakistan for which necessary budgetary provision may be made. All necessary safeguards should be adopted to ensure that only the affectees of flood-2010 get benefits out of this dispensation and the process to be monitored by the State Bank of Pakistan.
ii. The Economic Co-ordination Committee of the Cabinet further directed the Finance Secretary to look into the problems of small farmers with regard to their insured loans and take up the matter with concerned banks/insurance companies.
2. For implementation of the ECC decision SBP may kindly proceed further on the following guidelines:
i. The claims may be finalised after due scrutiny.
ii. No defaulter of loan may be qualified for write-off of outstanding loans.
iii. Only actual flood affected may be considered after due verification from the provincial authorities."