The National Commodities and Derivatives Exchange (NCDEX) has mooted a proposal for the launch of an electronic warehousing registry that can manage warehouse receipts issued across the country just as dematerialised equities traded in the stock market.
Speaking at a CII event to release a white paper on warehouse financing, Samir Shah, MD & CEO of NCDEX, said warehouse financing is a crucial enabler in the holistic development of agricultural markets and there is a perceived trust deficit that the banks have as far as the sector goes.
An electronic registry – which provides for transparency and tracking of commodities in every single warehouse – will go a long way in giving comfort to the banks and this can be the single biggest game changer for the industry, he said.
The proposal comes when commodity market regulator Forward Markets Commission is toying with the idea of having a single clearing house to settle trades across commodity markets.
Calling on enterprising companies to take a leaf out of NCDEX’s in-house software system Comtrack, which provides demat credit to farmers based on goods stored in accredited warehouse,
Shah said the same solution can be tweaked a bit and launched on the larger scale for warehouses across the country.New launches
Interacting with journalists in the sidelines, Shah said NCDEX plans to include 17 new commodities to the existing two commodities being traded in the forward segment.
“Our intention is to launch all the 26 commodities in the forward platform for which we have approvals as we are seeing good traction from farmers produce organisations, formed by group of farmers. For the first time, an organisation from Madhya Pradesh has sold on our forward platform,” he said. The white paper titled ‘A case for establishing a warehouse receipt transactions registry” dwells on importance of funding against warehouse receipts to improve the credit access to farmers. With commodity financing still not finding much support from the banking fraternity, the white paper throws light on how warehouse receipt transactions registry will help in bridging the information gap and boost lenders confidence.
Anil Choudhary, MD & CEO, National Bulk Housing Corporation, said the country runs one of the largest farm produce support programmes in the world but a majority of farmers realise only 35 per cent of the produce value.
“Most of the money goes into the hands of intermediaries as farmers cannot hold the produce to sell at the right time. Attracting institutional finance from banks is a must in this scenario,” he said.