MULTAN, Sept 6: Three commercial banks have reportedly shown interest to finance the proposed ‘custom ginning’ venture of the Punjab Agriculture Department.

The Bank of Punjab, the Habib Bank and the United Bank have agreed in principle to inject finances to make the idea of custom ginning workable.

Sources in the Agriculture Department said the representatives of the three banks were likely to attend a meeting of the provincial committee on custom ginning to be held in Multan on Saturday. The bankers will discuss the modalities, mark-up rate and terms and conditions to advance loans to growers and their cooperatives, if any, against their lint cotton stocks.

The concept of custom ginning is that the growers may get ginned their phutti from ginneries by paying the processing expenses instead of selling out the farm output in raw form at cheaper rates to the ginners, enabling the latter to speculate on price war by holding stocks.

A member of the committee on custom ginning, Khwaja Shoaib, said the issue to make the scheme workable was arrangement of the finances. He said commercial banks usually advanced 80 per cent to the ginners against the monetary value of their respective lint stocks. The committee had demanded only 50 per cent loan advancement for the growers against their lint stocks under the custom ginning scheme. The growers would pay their other dues timely through the bank loan while the stock would be pledged with the bank, he said.

“The scheme is aimed at financial empowerment of the farming community through the elimination of the role of middlemen,” he said.

In the last meeting of the committee, the expenses for custom ginning had been agreed upon at Rs43 per 40kg of phutti.

A senior Agriculture Department official told Dawn the government was considering an option to constitute a custom ginning cell to run the scheme. He said one such experience had already proved successful when in the year 2000-2001, a quality lint production cell was formed to ensure better ginning and marketing of the Punjab Seed Corporation’s cotton output. — Correspondent