Warehouse Receipt Financing&

Collateral Management System to Promote Agriculture Financing

Kashif Umar ThanviHBL

29 April, 2015Islamabad

1

Warehouse Receipt Financing

HBL Rural Banking2

Value Chain Financing Instrument

Warehouse Receipt

InsuranceInsp

ectio

n

FarmersProduce

Warehouse

Credit

System of Warehouse Receipt

Trade isn't about goods. Trade is about information. Goods sit in the warehouse until information moves them.” -C. J. Cherryh

Personal indemnity

Warehouse Receipt Financing

HBL Rural Banking3

Landscape

Sizeable portion of Pakistan’s agri-produce is wasted due to inadequate storage facilities, in-efficient supply chain

The security offering for agriculture financing is agriculture land and landless farmers working on leased lands often fail to get formal financing

The rate of informal lending is three fold i.e. at purchase of inputs, at sale of goods and negative weight variation while purchasing of goods

Financial Institutions are reluctant to provide financing to farmers based on agri-produce due to lack of warehousing infrastructure, regulations and information regarding quality and quantity of agri-produce, farmer credit profiling etc.

Growth in Agriculture in FY14 was only 2.1% - much slower as compared to other sectors of the economy

Warehouse Receipt Financing

HBL Rural Banking

RELEASE OF GOODS…..RELEASE OF GOODS…..

Release Order

Weight & Quantity Checks8

Process

Warehouse Receipt Financing

HBL Rural Banking5

• Secure access to credit for farmers

• Option to sell during price optimization period

• Transparent Price Discovery

• Reduction in crop losses

• Increased competitiveness

Benefits of WHR Financing Model to Farmers

Warehouse Receipt Financing

HBL Rural Banking6

• Development and augmentation of acceptable collateral

• Enhanced reach to small farmers

• Better monitoring of stocks through online tools

• The fidelity insurance by collateral manager minimizes the risk of staff embezzlement / misconduct

Benefits of WHR Financing Model to Banks

Warehouse Receipt Financing

HBL Rural Banking7

Challenges

7

Warehouse Receipt Financing

HBL Rural Banking8

Going Forward

8

Warehouse Receipt Financing

HBL Rural Banking9

THANK YOU