Tuesday, October 7, 2008

COMMODITY BACKED WAREHOUSE RECEIPT FINANCING

Purpose:
To finance traders/owners of goods against warehouse receipts of warehouses managed by Central Warehousing Corporations/ State Warehousing Corporation and warehouse accredited by MCX by way of Demand Loan/Cash Credit

Eligibility:
Any trader dealing in commodities

Eligible Amount of Finance:
Demand Loan:
75 % of the value of the warehouse receipt, valued at the market value OR 80% of the minimum support price declared by State/Central GovernmentWhichever is lower.
Cash Credit: 70 % of the value of the warehouse receipt, valued at the market value OR 75% of the minimum support price declared by State/Central Government, whichever is lower

Processing charges:
Cash Credit:
Rs.300/- per lac for the facility sanctioned
Demand Loan: Nil where loan is sanctioned and disbursed. Rs. 300 per lac in case the loan is sanctioned but the borrower does not avail.

Margin:
Demand Loan: 25% (minimum) of the value of the warehouse receipt, valued at the market value OR 20% (minimum) of the minimum support price declared by State/Central Government, whichever is higher
Cash Credit: 30% (minimum) of the value of the warehouse receipt, valued at the market value OR 25% (minimum) of the minimum support price declared by State/Central Government, whichever is higher

Insurance:
Comprehensive InsuranceInsurance cost to be borne by the warehouse receipt owner.

Security:
PrimaryCharge over warehouse receipt (resulting in charge over underlying goods), with lien marked in favour of the bank.
CollateralPersonal guarantee of partners or directors as the case may be.

Repayment:
Demand Loan: The loan should be liquidated as and when the produce is sold during the interim period not exceeding 12 months.
Cash Credit: Repayable on demand. To be brought to credit balance and DP made Nil/reduced when the quality certificate expires.

Others:
a) The Warehouse receipt should be duly marked lien in favour of the bank
b) The Branch should verify the authenticity of the warehouse receipt and get its lien noted with the warehouse before disbursal of the demand loan/ CC facility.
c) The margin shall be topped up on a fortnightly basis. However, it should be topped up immediately in case the price of commodity moves by more than 10%, in opposite direction, since last top up.
d) CC Limits and operating account will be different for different commodities handled by the same trader/customer. Interchangeability in limits can be offered, if required.

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