NCDEX, Kotak Mahindra Bank pact to provide commodities loans

National Commodity & Derivatives Exchange Ltd (NCDEX) today announced its tie-up with Kotak Mahindra Bank to provide financing to the depositors of goods in warehouses approved by the exchange.
Under the arrangement, farmers and traders who have kept their commodities in NCDEX-approved warehouses, can use such commodities as collateral for availing financial assistance from Kotak Mahindra Bank, NCDEX said in a statement.
In addition to Kotak Mahindra Bank, HDFC Bank, Axis Bank and IndusInd Bank are also associated with the exchange for providing this facility, it added.
NCDEX said it has developed a unique electronic accounting system known as Comtrack for facilitating maintenance of record of commodities held by the participants in the approved warehouses for the purpose of delivery on the exchange platform.

This state-of-the-art system, not only tracks the movement of goods in the warehouse ecosystem of the exchange, but also gives a transparent single window view to the lenders.
Under the agreement between the exchange and these banks, customers desirous of availing financial assistance can deposit their goods in exchange approved warehouses and the banks providing pledge finance will provide loans using the deposited goods as collateral.

Apart from banks, 10 NBFCs too have tied up with the exchange for extending pledge finance through this facility.
So far, Rs 946 crore has been disbursed against over 2.88 lakh tonnes of commodities, currently valued at Rs 1,358 crore, it said.

"Warehouse financing is a crucial enabler in the holistic development of the agricultural markets in India, but has traditionally been lacking in the trust factor. We have seen that more and more banks are now open for associating with us for e-pledge.
"Our recent tie up with Kotak Mahindra Bank is one more step forward in the process of bringing maximum number of banks into this ecosystem," NCDEX MD & CEO Samir Shah said.
Warehouse receipt financing is an important instrument to improve the credit access to agricultural producers. The efficiency of the inventory credit system in the country and the ecosystem that it creates for structured warehouse financing will go a long way in development of the agricultural sector in the country.