Mouse in the field

Now, warehouse receipts can be generated electronically

In a first of its kind, Union Food and Public Distribution Minister Ram Vilas Paswan on Tuesday issued the country’s first electronic negotiable warehouse receipt (eNWR) to farmers. The National E-Repository Limited (NERL), under which the eNWR is generated, will provide an institutional framework.

This will help farmers, traders, aggregators and processors of commodities meet their financial needs through warehouse receipt financing.

NERL, which was also launched on the same day, will work under the guidance of the Warehousing Development and Regulatory Authority (WDRA).

NERL is promoted by the National Commodity and Derivatives Exchange Ltd (NCDEX), the National Bank for Agriculture and Rural Development (NABARD), ICICI Bank and SBI.

Warehouse receipts will now be more credible. NERL will be responsible for creation, storage, security, authenticity and transfer of all electronic negotiable warehouse receipts within a regulated framework, between users of the repository such as warehouse service providers, banks, financial institutions, farmers, traders and value-chain participants, says Kedar Deshpande, CEO, NERL.

The repository will help to bring in more visibility, traceability and off-market transfer of commodities trading outside the exchange ecosystem, added a press release from NCDEX.

Currently, of the 64,000 warehouses in the country, only about 900 are registered with WDRA.

To encourage registration of other warehouses, the minister, on Tuesday, also launched a portal to allow warehouses to register with the authority without any paperwork.

The e-receipts will be issued against the agricultural produce that farmers have stored in warehouses registered with the WDRA.


This will enable farmers to sell their produce in mandis of their choice across the country. Farmers can also pledge the eNWRs, in part or full, to raise loans to fund their financial needs. In an interview with BusinessLine earlier, Samir Shah, MD & CEO of NCDEX, explained that the repository will build trust in the instrument of warehouse receipt.

Right now, when a loan is taken against a warehouse receipt by a farmer, it takes 3-4 weeks from the time the farmer deposits the goods, gets them to a warehouse, gets a warehouse receipt, the warehouse receipt actually gets funded and he gets money into his bank account. But with a repository and e-warehouse receipt, the time can be brought down from three to four weeks to a few minutes, helping both farmers and traders, he added.

When it comes to quality issues with regard to the inventory of farm goods, NCDEX’s experience will help, since the exchange has been running an accounting system within the exchange since December 2013, said the MD.

The warehouse receipt would be more trusted and bring down the borrowing costs for farmers, he further added. “Now, banks appoint collateral managers, who charge the bank 1 per cent, and the bank obviously adds that cost and gives it to the borrower, who is the farmer eventually. So, there are a bunch of costs that are getting layered on to the farmer which make it difficult for the farmer to use this avenue of financing. If this warehouse receipt becomes a credible instrument, and it is captured in a demat form in the repository, things will get far easier...”.

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