National Commodity & Derivatives Exchange (NCDEX) subsidiary NCDEX Spot Exchange has inked an agreement with the country’s largest lender, State Bank of India (SBI) in order to promote financial inclusion through an electronic pledge facility that will enable farmers and traders to use their goods stored in an approved warehouse as financial assets. The collaboration will perform the important function of mobilizing credit for the agricultural sector by creating secured collateral for banks.
The customers, who want to avail pledge finance, have to deposit their goods in NSPoT-accredited warehouses. The banks issuing pledge finance will provide loans using the deposited goods as collateral. When the collateral is sold, banks will directly receive payment against the loan.
This facility can be availed by all farmers, processors and traders who hold goods in NSPoT-designated warehouses. The facility will be launched initially in Maharashtra, Karnataka, Madhya Pradesh and Rajasthan.