NCDEX Spot Exchange (NSPOT), the leading e-spot exchange, today said it has tied up with the Central Bank of India (CBI) to provide credit to farmers, processors and market participants.
With this, depositors of NSPOT accredited warehouses would be able to avail loans against their produce from the Central Bank of India, an exchange statement said here.
The initiative is expected to benefit the farmers as it will provide them with another avenue to avail credit and trade their produce at a later stage, as and when they desire.
It would also help farmers to avoid forced sale at the peak of supply season, the statement said.
CBI would benefit from the existing customers of NCDEX Spot Exchange and be able to benefit the small farmers. The collateral management agency is Arya Collateral.
"This initiative with new age markets like NCDEX spot is yet another progressive step by the Central Bank to align with new age markets in its bid to provide value to small farmers," CBI's CMD M V Tanksale said.
"This is a part of the NCDEX's efforts to provide end to end solutions to the value chain participants of Agri-commodities, especially small farmers," NCDEX chief financial officer M K Anandakumar said.
Under the agreement, the customers keen to avail the facility would deposit their goods in NSPOT accredited warehouses. The banks would provide loans against the deposited goods. When the goods are sold, the proceeds would directly flow to the banks. After retaining their share of liability, the remaining amount is released to the farmers.
NSPOT provides various services related to market information to the banks and helps them in risk management using its exchange marketplace.
With the agreement, the bank would get wider reach to the farmers, processors and traders trading on the exchange.
NSPOT delivered more than 200,000 MT of agri commodities on its platform last year. It has more than 875 registered members and more than 2,400 mandi participants, as in December 2012.