SBP to launch financing facility for maize crop

Warehouse receipt financing will help farmers to store produce, address liquidity needs

KARACHI:

The State Bank of Pakistan (SBP) is all set to launch Electronic Warehouse Receipt Financing (EWRF) for maize crop on Tuesday, the central bank announced in a statement.

At a ceremony to be held in Chunian tehsil, Kasur district, banks will sign system usage agreements to commence operations under the newly developed system.

“This mechanism will not only provide farmers with an adequate facility to store their produce but will also address their liquidity requirement as these receipts will be used as a collateral to avail financing from banks,” it said.

The warehouse receipts would be issued by the approved collateral management companies in arrangement with their accredited storage facility operators.

The value of stored harvest will be assessed and marked on the electronically issued warehouse receipts, which can then be used to avail financing from banks.

Through this initiative, the central bank aims to achieve multiple objectives including increase in availability of formal credit to farmers, who otherwise do not have acceptable collateral to secure bank financing and minimisation of post-harvest losses through a network of accredited warehouses where standardised agricultural produce could be stored.

Moreover, it would ensure better price discovery to increase farmers’ profitability and guide them in making better farming decisions, the statement said.

The system has been developed through collaborative efforts of various stakeholders including the SBP, Securities and Exchange Commission of Pakistan, federal and provincial governments, and banks.

Published in The Express Tribune, February 22^nd, 2022.

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