The government will soon roll out Rs 1000 crores credit guarantee scheme for pledge financing to be availed of by small and marginal farmers against electronic negotiable warehouse receipts (e-NWRs) after depositing commodities in accredited warehouses.
“Within a month’s time we will be taking up the first case under the credit guarantee scheme which is expected to provide confidence to lenders to finance farmers against e-NWRs,” Anita Praveen, chairperson, Warehousing Development and Regulatory Authority (WDRA), said.
“Usage of e-NWRs by farmers and small traders have not gone up, with the credit guarantee the bankers will be willing to lend to farmers,” Praveen said at the event organised by National E-Repository, an NCDEX group company.
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.
Post harvesting, when prices of commodities decline, farmers can deposit their produce at 8,000-odd WDRA-registered warehouses and generate e-NWRs for accessing bank credit for the next crop. By increasing post-harvest lending against e-NWRs, the scheme aims to improve farmers’ income and enhance their access to institutional credit.
Officials 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 introduction of the Kisan Upaj Nidhi (Digital Gateway) portal of WDRA.
Last year, the government launched an online digital gateway, e-Upaja Kisaan Nidhu, which would allow farmers to store agricultural produce with the WDRA and obtain post-harvest loans from banks.
Food secretary Sanjeev Chopra recently had stated that the credit guarantee scheme will boost the post-harvest lending to Rs 5.5 lakh crore in the next 10 years from Rs 3962 crore in FY24.
“Increasing warehouse registration to 40,000 in the next 1-2 years needs to be taken up,” Chopra had stated.
Out of one lakh agri warehouses in the 40,000 are privately held.
The scheme aims at loan coverage of upto Rs 75 lakh and Rs 2 crore for agricultural and non-agricultural purpose respectively. It would guarantee coverage of 85% of loans upto Rs 3 lakh and 80% for loans between Rs 3 lakh to Rs 75 lakh.
These loans were availed by small farmers, women, FPOs and cooperatives.
“Aimed at reducing distress sales, the initiative addresses a critical gap in agricultural finance while also encouraging warehouse registration and development closer to farmland,” an official said. Food minister Pralhad Joshi has also called upon the WDRA to expand its reach and ensure more warehouses are accredited.
Aimed increasing outreach of commodity pledge financing a draft amendment bill to Warehousing (development and regulation) act 2007 was put in public domain for seeking reponse.