The Hindu Business Line : Warehouse lending may slow down

Mumbai, April 29 The Reserve Bank diktat to banks to review their advances to traders in agriculture commodities and lending against warehouse receipts is likely to impact commodity traders in the near future.

“It is not only the traders, but also farmers and processors are also being benefited by banks’ warehouse lending. RBI decision will definitely have an adverse impact on them,” said large warehouse company official.

Banks may slowdown their lending against warehouse receipts for the time being, he added.

In view of the current public policy concerns in regard to trading in food items, banks are required to review their advances to traders in agriculture commodities including rice, wheat, oilseeds and pulses as also advances against warehouse receipts, RBI said in its Credit Policy review.

“Banks are further advised to exercise caution while extending such advances to ensure that bank finances are not used for hoarding,” it added.

Worried over the run away inflation, both the banking regulator and Finance Ministry are on a fire-fighting mission to bring down commodity prices. The Government has recently banned export of agriculture commodities to increase domestic supply.

It has also authorised central agencies to import pulses and wheat in the domestic markets.

The first such review should be completed by May 15, 2008 and forwarded to the Reserve Bank for carrying out supervisory review of banks’ exposure to the commodity sector, RBI said.

More Stories on : Farm credit | Credit Policy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page