Sbi Warehouse Receipt Financing

State Bank of India (SBI) has a scheme for financing trader and owners of goods against warehouse receipts of warehouses managed by MCX/NBHC/NCMSL and Central Warehousing Corporation or State Warehousing Corporation by way of demand Loan or cash credit. SBI is the largest bank in India for SME financing with over 1.3 million SME loan accounts. In this article, we look at the Sbi Warehouse Receipt Financing scheme in detail:

Warehouse Receipt Financing

Trader dealing in commodities can avail warehouse receipt financing by pledging goods held by them in warehouses or warehouse receipts. Warehouse receipt is a legal document that provides proof of ownership of commodities (e.g., rolls of steel, cotton) that are stored in a warehouse for safekeeping. Warehouse receipts may be negotiable or non-negotiable. Negotiable warehouse receipts allow transfer of ownership of a commodity without having to deliver the physical commodity.

Type of Financing

The loan can be sanctioned as demand loan or cash credit. In case of demand loan, 75 % of the value of the warehouse receipt, valued at the market value or 80% of the minimum support price declared by State/Central Government, whichever is lower is provided as a loan facility. In case of cash credit facility, 70 % of the value of the warehouse receipt, valued at the market value or 75% of the minimum support price declared by State/Central Government, whichever is lower is provided as loan facility.

Margin for Loan

Margin money must be maintained by the applicant while availing the financing. For demand loan, a minimum of 25% of the value of the warehouse receipt, valued at the market value or Min 20% of the minimum support price declared by State/Central Government, whichever is higher must be maintained. For cash credit facility, 30% (minimum) of the value of the warehouse receipt, valued at the market value or 25% (minimum) of the minimum support price declared by State/Central Government, whichever is higher must be maintained as margin.

Collateral Security

The charge over warehouse receipt marked with lien in favour of the bank must be pledged as primary collateral security. Personal guarantee of partners or directors would be required as collateral security. In addition, comprehensive insurance must be taken on the goods pledge with the insurance cost borne by the warehouse receipt owner.

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Frequently Asked Questions

Common questions about Warehouse Receipt Financing Loans by SBI India.

Warehouse receipt financing can be availed for various commodities like rolls of steel, cotton, and other goods that are stored in warehouses managed by authorized organizations like MCX, NBHC, NCMSL, Central Warehousing Corporation, or State Warehousing Corporation.

A warehouse receipt is a legal document that serves as proof of ownership of commodities stored in a warehouse for safekeeping. It can be either negotiable, allowing transfer of ownership without physical delivery, or non-negotiable.

SBI offers two types of loan options under its warehouse receipt financing scheme: demand loan and cash credit facility. The loan amount and margin requirements vary for each option.

For a demand loan, the maximum loan amount is 75% of the value of the warehouse receipt, valued at the market value or 80% of the minimum support price declared by the State/Central Government, whichever is lower.

For a cash credit facility, the borrower must maintain a minimum margin of 30% of the value of the warehouse receipt, valued at the market value or 25% of the minimum support price declared by the State/Central Government, whichever is higher.

The primary collateral security required is the charge over the warehouse receipt marked with a lien in favor of the bank. Additionally, personal guarantees of partners or directors and comprehensive insurance on the pledged goods are also required.

Yes, SBI's warehouse receipt financing scheme is particularly beneficial for SMEs engaged in trading commodities. SBI is the largest bank in India for SME financing, with over 1.3 million SME loan accounts.

Warehouse receipt financing allows traders and owners of goods to unlock the value of their commodities stored in warehouses, providing them with working capital without having to sell their goods immediately. It also offers a secure way of obtaining financing against their inventory.

Yes, both negotiable and non-negotiable warehouse receipts can be used for warehouse receipt financing. Negotiable warehouse receipts allow the transfer of ownership without physical delivery of the commodities.

Authorized warehouses managed by organizations like MCX, NBHC, NCMSL, Central Warehousing Corporation, or State Warehousing Corporation are responsible for storing and safeguarding the commodities against which warehouse receipts are issued, enabling traders and owners to obtain financing.