NCDEX Spot Exchange (NSPOT) announced its tie up with Central Bank of India to give loan against agri-commodities as collateral to farmers and processors in Andhra Pradesh and Karnataka.
NCDEX Spot Exchange (NSPOT) announced its tie up with Central Bank of India to give loan against agri-commodities as collateral to farmers and processors in Andhra Pradesh and Karnataka.
NSPOT Executive Vice President Rajesh Sinha said, "This would increase their (farmers, processors and aggregators) holding powers and freedom to decide the appropriate time to sell their product and get better price."
This initiative will benefit existing customers of NCDEX Spot Exchange and depositors of NSPOT-accredited warehouses as they can avail loan against their produce from the bank, it said in a statement.
Under the agreement, customers keen to avail this facility will have to deposit their goods in NSPOT accredited warehouses. The banks would provide loans against the deposited goods, the exchange said.
When the goods are sold, the proceeds directly flow to the banks. After retaining their share of liability the remaining amount is released to the farmers, it added.
Central Bank of India Field General K Balakrishnan said: "This association will promote financial inclusion and bring in transparency and efficiency towards lending operation benefiting farmers, traders and SMEs."
He emphasised on educating market participants and their branch managers about this scheme by arranging seminars in association with NCSPOT to leverage the potential of this facility.
Two new collateral managers Navjyoti Commodities and Origo Commodities had joined hands with NSPOT and Central Bank of India in this new initiative for financial inclusion.
NSPOT provides various services related to market information to the banks and helps them in risk management.
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