NBHC in pact with two banks for agri credit

National Bulk Handling Corporation (NBHC), a financial technologies group company, set up for warehouse receipt financing solutions, has tied up with two leading public sector banks - IDBI Bank and State Bank of Patiala - for the commodities collateral management business.

Although there is no fixed amount involved in the deal, NBHC is expecting a turnover of Rs 800-1000 crore from the tie-up in the current financial year.

The MCX-promoted company is estimating a total turnover of Rs 5000 crore from all collateral management businesses.

Of the total Rs 16,000 crore commodity financing by banks, NBHC was planning to capture more than 25 per cent, said Anil Choudhary, MD and CEO of NBHC.

NBHC, an ISO-certified company, provides solutions for complete commodity and collateral management. Under the agreement, the company will work as a collateral manager with the two banks to provide farmers with hassle-free access to credit.

With the warehouse receipt financing gaining momentum, NBHC is planning to fund farmers, corporate and processors. It will also take up the responsibility of stocks pledged with the banks for quality and quantity.

For farmers, the venture will provide financial flexibility to a great extent, reducing seasonal price fluctuations and distress sales during the crop harvest season.

NBHC's 250 warehouses and IDBI Bank's 434 branches will work together to reach out to more customers.

"There is a vast potential of lending in the agri sector through warehouse receipt financing. Tying up with NBHC will help IDBI Bank increase the agri portfolio by building quality assets in agri lending. NBHC, through its expertise in commodity handling, in turn, will help IDBI Bank mitigate the risks associated with commodity financing," said D K Kamble, chief general manager of the priority sector department, IDBI.

Agri lending through warehouse receipts is likely to touch Rs 20 billion over the next 4-5 years.