New Delhi: Though the government is yet to set up a warehousing development regulator and notify rules to make warehousing receipts, a document of title or ownership of goods, a negotiable instrument, some private players have already tied up with banks to offer loans to farmers through such receipts.
Easy access: A market in Hodal, Haryana. Farmers can avoid distress sale of crops by procuring loans against warehousing receipts. Ramesh Pathania / Mint
Parliament passed the Warehousing Development and Regulation Act, or WDRA, that envisages creation of a warehousing regulator, among other things, in September 2007.
Once the rules are notified, warehousing receipts would allow for transfer of title of goods by farmers and traders without physically moving them.
Currently, warehousing receipts are non-negotiable instruments and trading in them is restricted.
Farmers can use their warehousing receipts to procure loans from banks, that could meet their working capital requirements and help avoid distress sale of crops immediately after harvest. Wheat harvest in the country—mostly in states such as Punjab and Haryana—begins in the first week of April.
“Although we are waiting for WDRA to be operational, NBHC (National Bulk Holding Corp. Ltd) has been moving ahead with its business of warehousing. It has helped channelize over Rs7,000 crore of funding through banks to over 45,000 farmers across the country by issuing farmers warehousing receipts,” said Anil K. Choudhary, managing director and chief executive officer of NBHC, which is an associate of the Multi Commodity Exchange of India Ltd, or MCX.
NBHC has at least 400 warehouses with storage capacity of about 1.65 million tonnes.
Choudhary said NBHC has entered into pacts with at least 30 banks to extend credit to farmers through warehousing receipts.
“In fact, we are now tying up with last-mile banks such as Saurashtra Gramin Bank, district cooperative banks in southern India and Deshi Mahila Sahakari Bank Ltd to cover as many farmers as possible,” he added.
National Collateral Management Services Ltd, or NCMSL, which is in 18 states and has 220 warehouses, has tied up with banks such as Axis Bank Ltd, HDFC Bank Ltd, Bank of India, ICICI Bank Ltd and Kotak Mahindra Bank Ltd. NCMSL is an associate of National Commodity and Derivatives Exchange Ltd, or NCDEX.
Sanjay Kaul, managing director, NCMSL, said: “While we are anxiously waiting for rules to be notified, we are moving ahead with our initiative of helping farmers obtain loans through banks.” He said the warehousing industry had expected a regulator to be in place by this month.
Kaul is also a member of a task force constituted by industry body Federation of Indian Chambers of Commerce and Industry, which is in favour of private-public partnership in warehousing development and tax benefits to the warehousing industry.
Meanwhile, a government official said work is on to set up the “warehousing development regulatory authority as also frame rules”. He didn’t want to be identified. “Both will be notified simultaneously. But it is difficult to say as to when this will happen.”
The warehousing regulator is meant to manage the new warehouse receipt system, establish accreditation agencies for warehouse registration, act as an arbitrator and fix warehouse rentals.