The Hindu Business Line : BoI signs pact with MCX arm for warehouse lending

Warehouse Bill
Passage of the Bill to attract more private investments
Rural infrastructure likely to improve
Lenders will be empowered to have final say in case of dispute

Mumbai May 22 Bank of India (BoI) has signed a memorandum of understanding (MoU) with National Bulk Handling Corporation Ltd (NBHC), a group company of Multi Commodity Exchange (MCX), for lending against warehouse receipts.

Of its Rs 3,550-crore crop-financing corpus, the bank has set aside Rs 2,000 crore for warehouse lending.

NBHC has arranged over Rs 1,300 crore in the last 3-4 years.

"We have tie-ups with about 10 banks and will be signing another 4-5 next week. Our target is to sign with at least 25 banks so that farmers can have a choice," said Mr Anil K. Choudhary, Managing Director, NBHC.

The company plans to take its storage capacity from 8 lakh tonnes to 50 lakh tonnes in 3-4 years.

NBHC, which covers 15 states and union territories through 188 warehouses, plans to take its presence across the country.

"As part of the MoU, we will be charging a concessional interest rate of 10.5 per cent for lending against NBHC warehouse receipts while interest rate would be 12.25 per cent for other warehouses. With over 3,000 branches of ours and NBHC's 1,400 warehouses, I'm sure we will exceed the target soon," said Mr Amit Roy, Senior Manager, Agri-Finance Department, BoI.

Bill passed

Lending against commodity warehouse receipts got a major fillip with the Lok Sabha passing the Warehouse (Development and Regulation) Bill 2005 last week.

The Bill will now be taken up in the monsoon session before signed by the President promulgating it into an Act.

The Bill has proposed a Central Warehouse Authority (CWA) which will be constituted by the Government after getting President approval.

"All the warehouses have the option of registering with CWA to make their receipts negotiable or issue non-negotiable receipts without CWA registration. I'm sure all warehouses want to register with CWA to ensure their credibility," said Mr PH Ravikumar, Managing Director, NCDEX.

Passage of the Bill will attract more private investments in warehouses, which were not forthcoming till recently. "Rural infrastructure is likely to improve with more investments coming in from private sector companies. With more warehouses coming up across the country, post-harvest loss of about 20-25 per cent can now be bought down considerably," said Mr Anjani Sinha, CEO, National Spot Exchange Ltd.

The Bill also empowers the lenders to have the final say if a dispute arises.

"If loans are raised through warehouse receipt of stolen goods, lending institutions or banks will have the final authority to offload the goods and cover their outstanding," said a banker.

More Stories on : Commodity Exchanges | Public Sector Banks | Storage

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