Farmers in India can now avail low-interest loans against electronic Negotiable Warehouse Receipts (e-NWRs) thanks to a Memorandum of Understanding (MoU) signed between Punjab & Sind Bank (PSB) and Warehousing Development Regulatory Authority (WDRA) on 5 February 2024 .
What are e-NWRs?
e-NWRs are digital documents issued by registered warehouses that certify the ownership and quality of the agricultural commodities stored in them. They are negotiable, meaning they can be transferred or sold to anyone. They are also secure, as they are stored in a central registry and verified by WDRA.
How do e-NWRs help farmers?
e-NWRs help farmers in several ways:
- They enable farmers to store their produce in quality warehouses and avoid distress sale at low prices.
- They allow farmers to access low-interest loans from banks and other financial institutions by pledging their e-NWRs as collateral.
- They provide farmers with flexibility to sell their produce at the best time and price in the market.
- They reduce the risk of fraud, theft, or damage of the stored commodities.
What is the MoU between Punjab & Sind Bank and WDRA?
The MoU between PSB and WDRA is aimed at promoting awareness and accessibility of low-interest loans against e-NWRs for farmers and traders. Under the MoU, PSB is offering loans against e-NWRs with no additional collateral and attractive interest rates. Under agriculture sector, up to Rs. 75 lakh and for other category borrowers, up to Rs. 5 crores loans are extended.
The MoU also seeks to improve agricultural pledge finance in India by enhancing the fiduciary trust among stakeholders. WDRA will provide regulatory support and guidance to PSB in lending against e-NWRs. PSB will also conduct outreach activities to inform depositors of the benefits of e-NWRs.
How can farmers apply for loans against e-NWRs?
Farmers who want to apply for loans against e-NWRs can follow these steps:
- Deposit their agricultural commodities in any registered warehouse that issues e-NWRs.
- Obtain the e-NWR from the warehouse operator through SMS or email.
- Visit any branch of PSB or apply online through PSB’s website or mobile app.
- Submit the e-NWR along with other required documents such as KYC, land records, etc.
- Get the loan sanctioned within a short time after verification of the e-NWR and other details.
What are the advantages of PSB’s loans against e-NWRs?
PSB’s loans against e-NWRs have several advantages over other types of loans:
- They have lower interest rates than unsecured loans or gold loans.
- They do not require any additional collateral or security apart from the e-NWR.
- They have flexible repayment options based on the cash flow of the borrower.
- They have minimal documentation and processing time.
- They have no prepayment penalty or foreclosure charges.
Conclusion
Punjab & Sind Bank and WDRA have taken a significant step towards empowering farmers with low-interest loans against e-NWRs. This initiative will help farmers to store their produce safely, access credit easily, and sell their produce profitably. It will also boost the warehousing sector and improve the agricultural supply chain in India.
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