SBP And IFC To Promote Agriculture Finance Through Warehouse Receipts – Eurasia Review

Deputy Governor State Bank of Pakistan (SBP) Ms. Sima Kamil whereas addressing a two-day specialised coaching workshop on Electronic Warehouse Receipt Financing (EWRF) for banks noticed that the coaching program can be instrumental to assist SBP’s current initiative to advertise EWRF within the nation and banks will have the ability to get palms on information about EWRF product growth, understanding the danger evaluation, value willpower mechanism and the worldwide finest practices. She inspired senior bankers to make use of the related information of EWRF gained throughout the session and disseminate it within the business for its easy implementation. 

EWRF is a mechanism whereby farmers can avail financing facility from banks by inserting their produce and agricultural commodities. By doing so, farmers can keep away from promoting their produce on unfavorable costs simply to make sure money flows to satisfy enter necessities of subsequent crop. It may also assist in lowering Pakistan’s excessive post-harvest losses. 

Adoption of EWRF by banks and its enhanced uptake won’t solely facilitate banks to realize increased ranges of agriculture credit score disbursement however may also assist them improve credit score outreach. 

Ms. Kamil famous that agriculture contributes virtually 1 / 4 to our GDP and employs half of the labor power. However, she regretted that folks related to agriculture sector face challenges in entry to finance and modernize infrastructure that will facilitate them both in storing or well timed disposal of their agricultural produce. 

She added that SBP took the initiative of EWRF in view of the position of warehousing regime in rising meals safety, lowering post-harvest losses and permitting financial institution financing to farmers towards commodities as collateral. She hoped that it’s going to facilitate merchants and processors to buy inputs they want, together with seeds, gas and fertilizers, earlier than and throughout the harvest, when their seasonal financing wants are vital.

Parallel it would encourage funding in agricultural infrastructure when it comes to constructing new, fashionable and commercially viable warehousing infrastructure. At outset, 25 banks signed System Usage Agreements (SUAs) with Naymat Collateral Management Company and SBP assigned indicative financing targets to those banks for FY 2021-22 and 2022-23. Now, these banks have began financing towards maize crop in varied districts of Punjab underneath the EWRF regime. 

The Deputy Governor acknowledged the assist prolonged by IFC when it comes to technical help to Government of Pakistan and different key stakeholders to make constructing blocks for EWRF in Pakistan. 

She expressed gratitude for IFC workforce led by its Country Manager for Afghanistan and Pakistan, Zeeshan Ahmed Sheikh and Ms. Nouma who has been coordinating an IFC-collaborated venture for the promotion of EWRF in Pakistan. She additionally inspired senior bankers to make use of the related information of EWRF and disseminate within the business for its easy implementation.

Speaking on the event Zeeshan noticed that modern financing fashions, similar to digital warehouse receipts, are extraordinarily necessary as they’ll unlock a large quantity of capital, bolstering the farming sector and, over the long term, supporting job creation and financial development. He additionally acknowledged the Government of Japan for supporting the EWR work.

SBP organized the two-day coaching workshop in keeping with the EWRF Uptake Action Plan in collaboration with IFC. During the workshop, world specialists from IFC and Pakistan shared their information and experiences with senior banking officers concerning completely different modalities of collateralized commodity financing and EWRF. The program offered a deeper understanding of EWRF to banks that may assist them to increase financing to farmers towards agricultural commodities as alternate collateral.