Drunk on the recent price-high, NR (natural rubber) is walking the black pepper way, in emerging as an agri-commodity valued as primary security against bank loans. But not without a nasty catch or two.
While for pepper, the godown stocks are often good enough, bankers for rubber-pledged loans would insist on approved warehouse receipts. Both Punjab National Bank and Federal Bank have now schemes for loans against pepper. But for rubber, only Federal Bank has taken the bold plunge.
The rubber board is in talks with banks for accepting rubber as a primary security to give agri-loans. ?Since humidity-controlled warehouses for storing rubber is a crucial caveat, the board has proposed a string of them in the Eleventh Plan,? vice president Kunjappan, Joint Rubber Production Commissioner, Rubber Board told FE. About five of them are likely to be ready by March 2008. The participating RPS (rubber production societies) and trading and processing companies are gung-ho over the move.
Federal Bank now offers loans upto 85% of futures selling price for rubber growers. ?Warehousing infrastructure is a facilitator, but not enough to make these kind of bank linkages work,? says Bobby Mathew, senior manager (SME), Federal Bank. ?The bank will have to put their act together with the Commodity Exchanges first.?
What the rubber board envisages, is a scheme by which a bank would offer a loan against a certain quantity of rubber stocks. The repayment would start only when the stocks are sold off. The warehouse chain is planned to support this centralised plan.
?Since humidity brings down the value of rubber in about three months, state-of-the-art warehouses could do wonders to rubber’s credit rating,? says CP Krishnan, head, commodities division, Geojit Paribas. By making hoarding unnecessary for rubber producers, the development could also ease the sourcing worries of tyre companies.