Chennai, Oct. 10
INDIAN Bank expects to generate Rs 150 crore to Rs 200 crore of loan assets by lending against commodities an activity that the bank has started recently.
A key issue in lending with commodities as security is the assessment of the security itself quantity, quality, price and protecting it against damage.
To take care of "collateral management," a new company has come up National Collateral Management Services Ltd (NCMSL).
Indian Bank on Monday entered into an agreement with this company.
The bank's Chairman and Managing Director, Dr K.C. Chakrabarty, told newspersons on Monday that he expected commodity-related loan sanctions of between Rs 150 crore and Rs 200 crore, which includes loans for building warehouses.
Promoted by banks, National Commodity and Derivative Exchange, Iffco, Nafed and Audit Control and Expertise (ACE) Geneva, NCMSL works toward the objective of creating a safe and liquid warehouse receipts market in the country.
The Managing Director and CEO of NCMSL, Mr A. Hari Prasad, told newspersons that the company would hire warehouse space, which is available aplenty across the country. He said the company's services would help farmers, who could warehouse their produce, take a `warehouse receipt' from NCMSL and get finance from banks on the basis of the warehouse receipts.
Banks, knowing that NCMSL is there to take care of the collateral, would be more comfortable to lend to the farmers.
NCMSL has a paid-up capital of Rs 15 crore.