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WDRA Holds Conference on ‘e-NWR based Pledge Finance with RRBs'

WDRA, in collaboration with NABARD, is working on a digital gateway to expedite the pledge finance process. The presentation on the proposed gateway highlighted its objectives, core features, architecture, connectivity, and benefits.

Shivam Dwivedi
WDRA Holds Conference on ‘e-NWR based Pledge Finance with RRBs (Photo Source: PIB)
WDRA Holds Conference on ‘e-NWR based Pledge Finance with RRBs (Photo Source: PIB)

The Warehousing Development and Regulatory Authority (WDRA), operating under the Department of Food and Public Distribution, organized a conference on the topic of ‘e-NWR based pledge finance with Regional Rural Banks (RRBs).’ This event aimed to raise awareness among RRBs about the WDRA ecosystem and the advantages of pledge finance through electronic negotiable warehouse receipts (e-NWR).

Dheeraj Sahu, Joint Secretary of WDRA, lauded the essential role that regional rural banks play in providing institutional credit to India's agricultural and rural sectors. Sahu highlighted that RRBs allocate a significant portion of their credit- 70%- towards the agricultural sector, with a particular focus on assisting vulnerable groups such as small and marginal farmers. He emphasized the common interests shared by WDRA and RRBs.

T K Manoj Kumar, the Chairperson of WDRA, urged RRBs to join WDRA's repositories to enable lending through e-NWRs. By partnering with public and private sector banks, WDRA seeks to enhance post-harvest credit availability in the nation. Kumar noted that the Reserve Bank of India (RBI) has raised the priority sector lending (PSL) limit for e-NWRs from Rs. 50 Lakhs to Rs. 75 Lakhs, while the PSL limit for other types of warehouse receipts is capped at Rs. 50 Lakhs.

He encouraged banks to offer pledge finance exclusively against e-NWRs. Kumar revealed that WDRA's efforts in the past years resulted in increased pledge finance against e-NWRs, and he encouraged RRBs to establish Memorandums of Understanding (MOUs) with WDRA to promote pledge finance, mirroring the practices of banks like SBI, PNB, and Federal Bank. He also spotlighted the digitization of WDRA's operations since 2017 and its pioneering e-NWR as India's first digital negotiable warehouse receipt. Kumar called upon RRBs to participate in WDRA's Digital Gateway, developed in collaboration with NABARD, with the aim of streamlining pledge processing and improving business convenience.

Mukesh Kumar Jain, Member of WDRA, emphasized that RRBs play a crucial role in India's rural economy. He noted that the disparity between pre- and post-harvest financing often leads to distressed sales by farmers and a rise in Non-Performing Assets (NPAs) in Kisan Credit Card (KCC) portfolios. With a mandate to allocate 75% of their loans and advances to the priority sector, RRBs are burdened with high gross NPAs in their KCC portfolios. Jain proposed that increasing agricultural credit for post-harvest pledge finance through e-NWRs could significantly reduce KCC-related NPAs.

Storing goods in WDRA-registered warehouses allows farmers to obtain loans against e-NWRs, repay KCC loans, and sell their produce when prices are favorable, thereby enhancing their income. Jain revealed WDRA's submission of a proposal to the Government of India for a Credit Guarantee Scheme based on e-NWRs, aiming to further diminish NPAs in KCC portfolios.

Furthermore, Jain pointed out that post-harvest pledge finance has the potential to escalate from Rs. 40 thousand crores to Rs. 5 lac crores. He underscored the security advantage of WDRA-registered warehouses over unregistered ones, citing that fraud instances are minimal under the WDRA ecosystem. Notably, Rs. 8,000 crores have already been financed through WDRA-registered warehouses, with negligible disputes concerning quality and quantity reported by banks. He highlighted WDRA's collaboration with governmental bodies like FCI, NAFED, and the National Horticulture Board, which have advocated for storing Central Pool Stock in WDRA-registered warehouses. Jain concluded by advocating for RRBs' involvement in WDRA's ecosystem to bolster post-harvest finance and uplift farmers' financial well-being.

Faiz Ahmed Kidwai, Additional Secretary of the Department of Agriculture and Farmers Welfare (DAFW), acknowledged that a vast majority- 86%- of India's farmers are small and marginal, often constrained in marketing options. Kidwai commended e-NWRs as an avenue for expanding choices for farmers, particularly in the context of the E-National Agriculture Market (eNAM) initiative. He expressed the Department's goal of promoting post-harvest loans to enable farmers to retain their produce during market gluts and low prices.

Kidwai praised e-NWR-based pledge finance as an option for farmers to secure loans against their produce stored in WDRA-registered warehouses, helping them access low-interest loans for their KCCs. He underscored WDRA's role in ensuring secure storage, fraud prevention, and operational transparency. Kidwai also discussed the model APMC Act, aimed at standardizing marketing loans across India, and the plan to utilize warehouses as trading centers. He urged banks, including RRBs, to collaborate with the Department to expand this system for the benefit of farmers nationwide.

N. Neerja, CGM of NABARD, highlighted the centrality of farmers and the significance of e-NWRs in facilitating their growth. She praised the Kisan Credit Card initiative for enhancing agricultural credit and emphasized the importance of digitization in the agricultural value chain. Neerja urged banks to leverage secure e-NWRs to increase lending and profits, considering the substantial combined balance sheet of all RRBs, totaling Rs. 10 lakh crores.

The conference witnessed a screening of a video showcasing WDRA's pan-India activities and a presentation outlining the benefits of the WDRA ecosystem. The presentation addressed agricultural marketing challenges, WDRA's core objectives, the advantages of WDRA registration, and WDRA's role in promoting secure lending through e-NWRs.

During the Open House session, participants engaged in vibrant discussions, offering suggestions to enhance the pledge finance system and expand RRBs' involvement in WDRA's ecosystem. RRB Chairpersons expressed their commitment to augment pledge financing through e-NWRs.

Representatives from regional rural banks, public sector banks, several ministries, government entities working in agriculture, logistics, and financing, industrial associations, repositories, and media personnel attended the conference.

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