Sri Lanka has launched a negotiable warehouse receipts system with World Bank assistance to help farmers gain access to loans from banks and avoids difficulties in the sale of agricultural commodities. This will be a major step towards the setting up of a commodities exchange on the direction of Finance Minister Ravi Karunanayake, a senior Finance Ministry official revealed. Negotiable warehouse receipts allow transfer of ownership of any agriculture commodity stored in a warehouse without having to deliver the physical commodity.
These receipts are issued in negotiable form, to be used as collateral for bank loans, he disclosed. Warehouse Receipts financing facilitates the dual purpose of providing a value chain service to farmers through warehousing, and access to credit simultaneously against stored produce. Chairman of the Regional Development Bank Prasanna Premarathna told the Sunday times that the project aims to increase agricultural productivity and livelihoods in rural areas of Sri Lanka by strengthening key aspects impacting agricultural production and training and capacity building of farmers groups and other key stakeholders.