In order to facilitate farmers in providing low-interest rate loans, Warehousing Development Regulatory Authority (WDRA) signed a memorandum of understanding (MoU) with the State Bank of India (SBI), India’s largest public sector bank on Monday.
The MoU was signed with the intent of promoting awareness about the new loan product called ‘Produce Marketing Loan’ to exclusively fund against e-NWRs (electronic Negotiable Warehouse Receipts) with features such as nil processing fee, no additional collateral and attractive interest rates.
The MoU is aimed to provide information to depositors about the benefits, besides doing further outreach activities to improve agricultural pledge finance in India.
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It is envisaged that the low-interest rate loans to farmers would have far-reaching consequences with regard to the acceptance of e-NWRs among small and marginal farmers. It has the potential to make a significant impact on the finances of rural depositors by preventing distress sales and releasing better prices for the produce.
Combined with the inherent security and negotiability of the e-NWR system, the Produce Marketing Loan will go long way in improving rural liquidity and increasing farmers’ income.
During the signing event, there was a brief discussion on the importance of post-harvest pledge financing using warehouse receipts for improving rural credit. The bank representatives also highlighted the risks faced by the lending institutions in this sector. WDRA assured their full regulatory support in improving the fiduciary trust among stakeholders.
