Follow
Publications: 18 | Followers: 0

CCS Capacity Building in Botswana - World Bank

Publish on Category: Birds 0

Warehousing Receipts and Innovative Waysto Fund AgribusinessesPresented by Nasim Beg
09thMarch 2019
Pakistan Business Council Seminar - Financing to Support "Make in Pakistan"
The value of agricultural crops at current prices is approximately PKR 3 trillionAggregate bank finance of agricultural was PKR 442 billion at December 2017 (SBP)The present ecosystem is not conducive to agricultural finance; there is now an initiative by the government to address some of the impediments through supportive institutional arrangementsTwo institutions (both regulated by the SECP), that will provide the infrastructure and support to the banking sector are:Collateral Management Companies (CMCs) duly licenced under Collateral Management Companies (CMC) Regulations 2017;andPakistan Mercantile Exchange (PMEX)
2
Collateral Management CompaniesWarehouse Receipts and Commodities Trading
Pakistan Business Council Seminar - Financing to Support "Make in Pakistan"
A Collateral Management Company (one under formation at this stage) is entrusted with:Accrediting warehouses that meet the criteria of having credibility, as well as the expertise to sort and store agricultural produce to certain minimum standardsEnlisting the services of Specialist companies to be used to certify quality/grading of the produce being storedEnsure that all necessary collateral management arrangements such as insurance, inspections, etc. are in placeAct as the depository for the Warehouse Receipts (WHR) covering the deposits by the farmers/depositors of the agricultural commodities at the respective warehouses, under its accreditation,Authorise respective warehouses to deliver the commodities to the holder of the WHR
3
Collateral Management Company
Pakistan Business Council Seminar - Financing to Support "Make in Pakistan"
PMEX currently provides trading arrangements for several commodities, including some agricultural produceThe current structure for the agricultural produce is a pilot arrangement, whereby there are selected warehouses that are storing the produceThe produce is traded at PMEX, as well as, settled through PMEXCMCs will take over the responsibility of issuing the Warehouse Receipts in electronic form, such EWRs will be eligible for induction into a Central Depository System and become CDS-eligible securities
4
Trading Arrangements
Pakistan Business Council Seminar - Financing to Support "Make in Pakistan"
The under-formation CMC is in the process of tying up with experts, where after it will get a formallicencefrom the SECP and gradually roll out the accreditation of warehouses for different agricultural produce in different locations nationwideAn Electronic Warehouse Receipt (EWR) will be issued by the CMC to the depositor of the produce; which will have all necessary details of the commodity, such as the quality/grading, etc., that will enable it to be traded at PMEXThe EWR issued by a Collateral Management Company is be transferable only upon endorsement of such CMC and shall entitle the lawful holder thereof to receive the Produce specified in it on the same terms and conditions as the original depositor/owner/seller/transferorThe claim to the underlying commodity represented by an EWR, is transferred when the issuing CMC records its transfer to a new owner in its software system (this change is instantaneous).
5
Electronic Warehouse Receipts
Pakistan Business Council Seminar - Financing to Support "Make in Pakistan"
If an EWR is endorsedor is pledgedin favour of a bank in the CMC’s record, that bank can provide finance against the EWRThe bank will have the comfortof havingthe underlying commodity as collateral, which it can take delivery of or sell through PMEX should the need arise;Additionally, the bank will be able to manage the price movement risk through adequate margining, as there will be continuing and transparent price discoveryat PMEX
6
Bank Financing of Agricultural Produce
Pakistan Business Council Seminar - Financing to Support "Make in Pakistan"
Thank you!
7
Pakistan Business Council Seminar - Financing to Support "Make in Pakistan"

0

Embed

Share

Upload

Make amazing presentation for free
CCS Capacity Building in Botswana - World Bank