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 ? What is warehouse receipt (WHR)?

6
 According to the Warehouse (Development and Regulation) Act, 2007, "
 



" means an acknowledgement in writing or in electronic form issued by a warehouseman
or his duly authorised representative (including depository by whatever name called) of the
receipt for storage of goods not owned by the warehouseman. A WHR is either negotiable or
non- negotiable i.e. the title can be either endorsed to someone else (negotiable) or its title can¶t
be transferred (non - negotiable). The ability to be sold or transferred to another party as a form
of payment is used to define the term negotiable. Something which is negotiable is transferable
by endorsement and delivery.

 ? Where WHR can be availed?

6
WHR can be availed at any warehouse. Any company or person can issue a WHR which is
negotiable provided it is registered under the Warehouse (Development and Regulation) Act,
2007. Any company or person which doesn¶t want to issue any negotiable WHR need not be
registered in this act.

 ? 0ommodities under WHR.

6
 0ommodities under WHR vary from bank to bank and warehouse facility to warehouse
facility. Banks provide financing to WHR for which the

 ? uargins of the banks in WHR.

6
 Œenerally margins differ from bank to bank based on the commodity¶s characteristics i.e.
its quality, moisture content, perishability, etc. It is generally 25% - 40% of the commodity price
declared by the 0ollateral uanager (0u).

 ? 0ollaterals for WHR.

6
 Working capital finance can be either cash credit or pledge. The cash credit facility is
basically an overdraft facility where the primary collateral is the stocks in the warehouse but
there is secondary collateral also like mortgaging of land or house. But in case of pledging, the
primary collateral is stocks in the warehouse but there is no provision for secondary collateral.
 ÿ ? rocedure for sanction of a loan and tenure of the loan.

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For cash credit the tenure of the loan is 12 months.

For pledge, the tenure of the loan is 11 months.

 ? Disbursement of the loan amount.

6
After all the required documents are submitted and all the formalities are fulfilled the banks
disburse the loan amount to the loanee after deducting the margin, insurance and processing fees.

 ? Documents required for disbursement.

6


¦? Address proof
¦? hoto ID (KY0 mandated by RBI)
¦? Authorisation (0u issues WHR appointed by the bank)
¦? Banking facilities other than the current bank in context.

Î ? Servicing of the loan.

6
 After disbursement of the loan, the bank ensures that the loan is ustilised as per the
intention of the loan for which it was taken.
 ?0losure of the loan at the end of season.

6
After the loan has been repaid, the account of the loan is closed.

 ?Risks involved in the loan.

6
 There are many risks involved in the WHR financing. Some of them being fraud, nexus
between the 0u and the client, the absence of sub-lease clause in the contract, presence of sub ±
sub ± lease which cannot be enforced in the court of law, perishability of the commodity stored,
moisture content of the commodity, etc.