Context: Recently, the Union Minister launched the Credit Guarantee Scheme for e-NWR based Pledge Financing (CGS-NPF).

• It allows farmers to avail loans against electronic Negotiable Warehouse Receipts (e-NWRs) after depositing their commodities in Warehousing Development and Regulatory Authority (WDRA) accredited warehouses.

About Credit Guarantee Scheme for e-NWR based pledge Financing

• It aims to provide credit facilities to small farmers to prevent them from distress selling.

• It provides a corpus of Rs 1,000-crore for post-harvest finance availed by farmers against electronic negotiable warehouse receipts (e-NWRs) after depositing commodities in Warehousing Development and Regulatory Authority (WDRA) accredited warehouses.

• Coverage: Loans up to Rs. 75 lakhs for agricultural purpose and Loans up to Rs. 200 Lakhs for non-agricultural purpose.

• Eligible Institutions: All scheduled banks and all cooperative banks.

• Eligible Borrowers: Small and Marginal Farmer (SMF)/ Women/SC/ST/PwD Farmers, other farmers, MSMEs, Traders, FPOs and Farmer cooperatives.

Risks covered: Credit and warehouseman risk

• Guarantee coverage: 85% for loans up to Rs. 3L and 80% for loan between 3 to 75 lakhs for small and marginal farmers/women/SC/ST/PwD and 75% for other borrowers.

• The credit guarantee schemes are expected to enhance the availability and accessibility of finances for the targeted beneficiaries, as they play an important role in economic growth. 

• It will serve to increase post-harvest lending against e-NWRs and thereby, play a significant role in improving farmers’ income.

Significance of the Scheme

• Minimise distress selling by farmers:  Ensuring availability and accessibility of finances for the targeted beneficiaries.

• Instill confidence in bankers, addressing the default arising out of both credit and warehouseman risk. 

About WDRA

• About: Statutory body under Warehousing (Development & Regulation) Act, 2007.

• Objective: Introduce the NWR system, allowing farmers to store their produce in nearby, and scientifically managed warehouses. 

• Key Functions: Regulating warehouses, promoting scientific storage, boosting supply chain efficiency, etc.