The Deputy Governor of the State Bank of Pakistan (SBP), Ms. Sima Kamil, during a two-day specialized training workshop on Electronic Warehouse Receipt Financing (EWRF) for Banks, observed that the training program will be instrumental in supporting the recent initiative of SBP to promote EWRF in the country and banks will be able to gain knowledge on EWRF product development, understanding of risk analysis, pricing mechanism and international best practices. She encouraged the senior bankers to use the relevant EWRF knowledge acquired during the session and disseminate it to the industry for its smooth implementation.
The EWRF is a mechanism through which farmers can avail finance facility from banks by placing their agricultural commodities and commodities. By doing so, farmers can avoid selling their produce at unfavorable prices just to ensure cash flow to meet the input needs of the next harvest. This will also help reduce Pakistan’s high post-harvest losses.
The adoption of the EWRF by banks and its increased adoption will not only enable banks to achieve higher levels of agricultural credit disbursement, but will also help them to improve credit outreach.
Ms. Kamil noted that agriculture contributes almost a quarter of our GDP and employs half of the workforce. However, she regretted that those associated with the agricultural sector face difficulties in accessing finance and upgrading infrastructure that could help them store or dispose of their agricultural products in a timely manner.
She added that the SBP took the lead on the EWRF given the role of the warehousing regime in increasing food security, reducing post-harvest losses and providing bank financing to farmers. against commodities as collateral. She hopes this will help traders and processors buy the inputs they need, including seeds, fuel and fertilizer, before and during harvest, when their seasonal financing needs are high.
At the same time, it will encourage investment in agricultural infrastructure in terms of building new, modern and commercially viable storage infrastructure. Initially, 25 banks signed System User Agreements (SUAs) with Naymat Collateral Management Company and SBP assigned indicative funding targets to these banks for the 2021-22 and 2022-23 fiscal years. Now, these banks have started financing maize crop in various districts of Punjab under the EWRF scheme.
The Deputy Governor acknowledged IFC’s support in terms of technical assistance to the Government of Pakistan and other key stakeholders to form the building blocks of the EWRF in Pakistan.
She expressed her gratitude to the IFC team led by its country director for Afghanistan and Pakistan, Zeeshan Ahmed Sheikh and Ms. Nouma who coordinated a project in collaboration with IFC for the promotion of EWRF in Pakistan. She also encouraged senior bankers to utilize relevant knowledge from EWRF and disseminate it to the industry for its smooth implementation.
Speaking on the occasion, Zeeshan observed that innovative financing models, such as electronic warehouse receipts, are extremely important as they can unlock a massive amount of capital, strengthen the agricultural sector and, in the long term, support job creation and economic growth. He also thanked the Government of Japan for supporting the work of the EWR.
SBP organized the two-day training workshop in accordance with the EWRF adoption action plan in collaboration with IFC. During the workshop, global experts from IFC and Pakistan shared their knowledge and experiences with senior bank officials regarding different modalities of secured commodity finance and EWRF. The program has given banks a better understanding of the EWRF, which will help them provide finance to farmers against agricultural commodities as an alternative collateral.