| April 3
April 3 Pakistan's central bank has set up a
working group to draft guidelines for warehouse receipt
financing, to help develop a market for physical commodity
trades and boost efficiency in the country's agricultural
The working group is chaired by central bank deputy governor
Saeed Ahmad and comprises both commercial and Islamic banks as
well as the International Finance Corp, the private
sector arm of the World Bank.
Warehouse receipts are issued as evidence of ownership of
specific physical commodities, and they can be used to ease the
collateral constraints of traditional financing.
Pakistan's Islamic banks could potentially use the receipts
to conduct sharia-compliant lending and manage their liquidity,
since many Islamic financial structures are based on ownership
of physical assets. Pakistani regulators are encouraging
stronger links between Islamic banks and the agricultural
The central bank hopes warehouse receipt financing will help
farmers and traders in a sector that suffers from a lack of
infrastructure. Pakistan produces around 30 million tonnes of
grains annually but storage capacity is a fraction of that
amount, the central bank said in a statement on Wednesday.
The regulator said it wanted to develop storage capacity to
reduce post-harvest losses, estimated at more than 10 percent
for grains and up to 35 percent for fruits and vegetables.
Under a five-year plan to promote the Islamic finance
industry, Islamic banks are being encouraged to allocate at
least 5 percent of deposits or 10 percent of financing to the
agricultural sector by 2015.
The central bank said the development of warehouse receipts
would also pave the way for the linking of the country's
commodities markets with international commodities exchanges.
Development of a post-harvest financing system has started
in collaboration with the Karachi stock exchange, the
Pakistan Mercantile Exchange and other government bodies, the
central bank said.
(Editing by Andrew Torchia)