Government launches negotiable warehouse receipt system for farmers

Farmers in the country will henceforth be able to seek bank loans against warehouse receipts issued for their storage under the negotiable warehouse receipt system.

Minister of consumer affairs, food and public distribution, K V Thomas, launched the negotiable warehouse receipt system (NWRs) in New Delhi today.

Farmers can seek loans from banks against the warehouse receipts issued to them against their storage. These receipts issued by the warehouses registered with the Warehousing Development and Regulatory Authority (WDRA), would become a fully negotiable instrument backed by a central legislation, an official release said.

The WDRA was set up by the government in October 2010 to regulate and develop warehouses in the country.

Launching the system, the minister said the new initiative would help farmers avoid distress sale and facilitate finance to the agriculture sector. It would also allow banks to improve the quality of their lending services in the agriculture sector, increase liquidity in rural areas and encourage better price risk management in agricultural commodities.

Underlining the importance of modernisation of warehouses, Thomas said that it is imperative that world class warehousing facilities for all commodities, including agricultural commodities, are created in the country on a priority basis.