With a view to develop warehousing in the country and to promote easy financing for farmers, the Government of India has set up the Warehousing Developing and Regulatory Authority (WDRA) and introduced a Negotiable Warehouse Receipt (NWRs) system. 

            Farmers can seek loans from the banks against the Negotiable Warehouse Receipts issued by WDRA. NWRs are issued to the farmers against their commodities stored in warehouses registered with WDRA.  It helps farmers to seek loans from banks and to avoid distress sale of agricultural produce.  Farmers do not need to sell their produce immediately under any constraints they can store and sell it later on getting attractive prices. 40 agriculture commodities have been notified against which receipts can be issued.

The system is beneficial for a number of other stakeholders also such as banks, financial institutions, insurance companies, commodities exchanges as well as consumers. The negotiable warehouse receipt can become a prime tool of trade, finance and banking in rural area

Banks have already launched special schemes for offering loans against warehousing receipts on attractive interest rates.

Advantages of Registering with WDRA

The registered warehouses:

-          May issue negotiable warehouse receipts on which farmers/depositors may be able to seek loans more easily from banks.

-          Will follow norms/requirements prescribed by WDRA, which would encourage scientific storage.

-          Will have only trained warehousemen.

-          Will mention quality standards/grades of the commodities stored in their warehouses on the Negotiable Warehouse Receipt.

Requirements for registration

-          The warehouses should be constructed as per Bureau of Indian Standards (BIS)/FCI/CWC specifications.

-          The warehouses should be equipped with all necessary equipment/insurance for weighing, handling, sampling, grading, and fire-fighting and insect/pest management.

-          The warehouses should have positive net worth certified by a Chartered Accountant or credit worthiness certificate from a scheduled bank for individual warehouse or for its organization.

-          The warehouses should have adequate trained staff with expertise and knowledge for the scientific storage of goods to be stored in the warehouses.

-          The warehouses should have adequate fire-fighting and security arrangements.

Advantages of Warehouse Receipts to Farmers

-          Scientific warehousing will provide protection to the farmers against the risks of distress sale due to glut in the market at the time of procurement.

-          Due to linkage of each registered warehouse with the banks/financial institutions, the farmers will be able to get instant credit against Negotiable Warehouse Receipt.

-          It will provide increased liquidity in the rural areas and thereby the empowerment of the farmers.

-          Banks/financial institutions will provide better lending conditions because of increasing comfort and reduction in the cost of capital.

-          In addition to the APMC, registered warehouses can be linked with the spot exchanges which will provide accessibility to the pan-India market prices of commodities along with reduction of intermediaries, thereby, maximizing farmers’ sales realization.

-          Since all registered warehouses and the commodities lodged there in are insured, farmers will not be subjected to any damage/risks/losses of commodities in quantitative and qualitative terms.

-          Will ensure higher quantitative and qualitative standards thereby, enabling the farmers to fetch better prices for their produce.

-          The warehouses should be storage worthy for different goods to be stored.

Advantages to the other stakeholders

-          NWR will provide competitive all India market to all stakeholders, for getting the best prices.

-          Assured quality and quantity to the consumer.

-          Will provide more comfort to the bankers due to uniformity in the format which has been finalized in consultation with Indian Bankers Association (IBA).

NCJ/sr