Warehouse Receipts (WR) are documents issued by warehouse operators as evidence that specified commodities of stated quantity and quality, have been deposited at particular licensed warehouses by named depositors.

Warehouse Receipt Financing

Under a warehouse receipts financing scheme, goods stored in a warehouse are used as collateral against a loan. This is part of structured trade finance / agriculture lending facilities offered by banks.

The bank extends financial assistance to farmers, partnership firms and limited companies against pledge of agricultural commodities. Farmers who want to store their produce in warehouses to avoid distress sale immediately after harvest, Processors/ Traders who want to procure large quantities of produce during the season and process / sell over a period of time and large processors who wish to store required quantity of commodity for future processing by contracting with sellers can benefit from the scheme.

THE PROCESS

WRF – BENEFITS

Farmers / Traders / Exporter

1. Producer gets better return
2. Minimize price risk
3. Price discovery
4. Liquidity of Funds
5. Bank Finance at better interest rate & longer terms
6. More opportunity to invest and more flexibility in trade
7. Avoid distress sale during harvest
8. Confidence in terms of storage
9. Confidence in grade / Quality
10. Preservation of Stocks to avoid any kind of damage & deterioration

Institutional Banker

1. Secured Finance
2. No Risk for Quality, Quantity
3. Interest Revenue
4. Increase in client base of other services
5. Minimum procedural work

Exchange / Broker

1. Turnover / liquidity of the Exchange / broker will increase
2. Transaction charges / Brokerage will increase due to increase in turnover
3. Increase in member / client base