The government today launched negotiable warehouse receipts system, which will help farmers gains access to loans from banks and avoid distress sale of agricultural commodities.

Negotiable warehouse receipts allow transfer of ownership of that commodity stored in a warehouse without having to deliver the physical commodity. These receipts are issued in negotiable form, making them eligible as collateral for loans.

“Banks will have more faith in such negotiable warehouse receipts and farmers would be able to seek loans easily against these receipts,” Food and Consumer Affairs Minister, Mr K V Thomas said after the launch.

It will also enhance banks’ interest in lending in respect of farm goods deposited by farmers in the registered warehouses, he said, adding that these receipts will increase liquidity in the rural areas and encourage scientific warehousing of goods.

Warehouse receipts are made negotiable under the Warehouse (Development and Regulation) Act, 2007 and regulated by the Warehousing Development and Regulatory Authority (WDRA).

Pointing out that farm loan at high interest rate of 11 per cent to small and marginal farmers is creating hardships, the minister said, “I have already taken up this issue with the finance ministry. I am confident that in due course, efforts would be made to get crop loan at concessional rate of 4 per cent extended to post-harvest management loan.”

A post-harvest loan will incentivise farmers to store their produce in warehouses at lower rate of interest, he said.

Mr Thomas, who distributed registration certificates to 51 warehousemen, said that there was an urgent need to build world class warehousing facilities as “substantial quantity of wheat procured by FCI in northern states is stored in open complexes”.

Meanwhile, WDRA Chairman, Mr Dinesh Rai noted that availability of land for construction of warehouses was a problem in the state government. He also said that negotiable warehouse receipts should be made available for non-agri items.

So far, the WDRA has received 318 applications with warehousing capacity of over 11 lakh tonnes from different states for registration under the Warehousing Act, he added.

Related Topics
comment COMMENT NOW