The Hindu Business Line : PNB loan against warehouse receipts

FARMERS and traders will now be able to obtain finance against warehouse receipts, thanks to a new scheme introduced by the Punjab National Bank (PNB) in collaboration with National Multi-Commodity Exchange of India Ltd (NMCE) and Central Warehousing Corporation (CWC).

To start with, PNB has authorised four branches at New Delhi, Kottayam, Kochi and Kozhikode, to extend demand loans to farmers and traders when they present CWC negotiable warehouse receipts, which certify the quantity, quality and location of the commodity stored in CWC warehouses, and the relevant forward sale contracts of the participants with the members/brokers of the exchange.

The commodities covered are cardamom, pepper, rubber, jute and jute products.

A farmer or a trader can get loans for non-perishable agricultural and other commodities from Rs 50,000 to Rs 1 crore, with margin of 20 per cent to 40 per cent, valuation of which to be arrived at on the basis of market value/invoice value/minimum support price fixed by the Government, whichever is lower.

Under the scheme, the demand loan shall be sanctioned for a period not exceeding six months or for the validity of the pledged warehouse receipt, whichever is earlier.

Mr Kailash Gupta, Managing Director, NMCE, said "This scheme will improve institutional credit to the agriculture."

According to the scheme, a farmer/trader shall deposit the agricultural and other commodities with CWC and obtain a warehouse receipt, which certifies the quantity and quality of the deposited commodity.

The farmer/trader, thereafter, shall enter into a forward sale contract with exchange's member/broker who in turn will place the client order from his terminal in NMCE's computer system.

NMCE, after verifying details of the client and the validity of warehouse receipt, will allocate a separate client identification no, for the said farmer/trader if he wants to avail finance from PNB.

Upon receiving the broker's order incorporating the client identification no, NMCE system will create an order ID with time stamp, and a trade will be executed on matching with the opposite order, which becomes a forward sale contract.

Printed from the member's computer, the forward sale contract will be given to the seller, who, along with the warehouse receipt can approach PNB Branch for the purpose of availing loan.

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