Cane purchase receipts: SBP opposes upgrade to promissory notes

State Bank of Pakistan opposes granting cane purchase receipts the status of promissory notes.

ISLAMABAD: The State Bank of Pakistan (SBP) has opposed granting cane purchase receipts the status of promissory notes.

The Ministry of Industries and Production had proposed that the receipts be given the status of promissory notes to facilitate timely payment of dues to sugarcane growers. The ministry has also sent a summary of the proposal to the Economic Coordination Committee for approval.

However, the Small and Medium Enterprise Finance Department of the SBP has sent a sample cane purchase receipt to the ministry upon the latter’s request.

According to a letter written by Mansoor H Siddiqui, a director of the SBP, to Ministry of Industries and Production Joint Secretary Shaista Suhail and obtained by The Express Tribune, the SBP was informed of a Sugar Advisory Board’s decision that cane purchase receipts should get the status of promissory notes.

The SBP said in reply that it has prepared a sample cane purchase receipt, which has been approved by the central bank’s general council office, as requested by the ministry.

However, the SBP has opposed the ministry’s proposal saying that a negotiable instrument should be transferrable by delivery or endorsement. The letter further explained that a negotiable instrument is payable either to the bearer on a future date or on demand and all instruments should legally be in one of the forms permissible by law and independent of goods receipt.

Published in The Express Tribune, December 21^st, 2010.