Review of Warehouse Receipt As An Instrument For Financing In India

Abstract- One of the important aspects of the Indian commodity derivative market is the introduction of warehouse receipts WRS as an alternative solution for market participants to access short-term finance. The concepts of the WRS system is based on warehouse receipts which can be used as collateral for accessing finance. The system is made more sophisticated by adopting measures such as grading of commodities according to their quality rating warehouses according to their size reputation and integrity etc. In India receipts issued by Central State Warehouses are accepted as collateral by banks however those issued by private warehouses are not. Since farmers traders will not deposit their goods with a warehouse whose receipts are not financed by banks viability of the private warehouse is at stake. Hence there is scope for expanding the warehousing infrastructure and also WRS system by making it mandatory for the banks to endorse private WRS.