The government has approved a Rs 1,000-crore credit guarantee scheme for pledge financing availed of by farmers against electronic negotiable warehouse receipts (e-NWRs) after depositing commodities in accredited warehouses.
This move is aimed at growing e-NWR-based pledge finaning to more than Rs 1 trillion over the next 10 years, from Rs 3,962 crore in FY24.
Food secretary Sanjeev Chopra said the fund will address anticipated credit risks of lenders. It is also expected to improve trust on warehouses as they increase post-harvest finance to farmers through e-NWRs.
“A credit guarantee scheme has been approved recently and will be launched shortly,” Chopra said.
The pledge financing against e-NWRs was not gaining traction to a satisfactory level despite the government’s efforts to make it seamless with the recent introduction of the Kisan Upaj Nidhi portal, he said.
Post harvesting, when prices of commodities decline, farmers can deposit their produces at 6,000-odd WDRA-registered warehouses and generate e-NWRs for accessing bank credit for the next crop.
In March this year, the government launched an online digital gateway, e-Upaja Kisaan Nidhu, which would allow farmers store agricultural produces with the Warehousing Development and Regulatory Authority (WDRA) and obtain post-harvest loans from banks.
Out of 0.1 million agri warehouses in the country, 40,000 are privately held.
Officials said farmers getting loans against stored commodities also provide liquidity in the hands of farmers at the time of harvest. They can also sell their commodities when prices are remunerative.
Warehouses charge Rs 7/quintal per month for storing commodities.