NCDEX ties up with Kotak Mahindra Bank, others for pledge finance

The facility will enable farmers & traders to use commodities stored in an approved warehouse as collateral against financial assistance

National Commodity and Derivatives Exchange (NCDEX) has tied up with Kotak Mahindra Bank to promote financial inclusion through electronic pledge facility. Under this, farmers and traders can use their commodities stored in approved warehouses as collateral for availing financial assistance. HDFC Bank, Axis Bank and IndusInd Bank are also associated with the exchange for providing this facility.

NCDEX has developed an electronic accounting system, known as COMTRACK, to facilitate maintenance of the records of commodities held by the participants in warehouses for the purpose of delivery on the exchange platform.

This system tracks the movement of goods in the warehouse ecosystem of the exchange and also gives a transparent single-window view to the lenders.

Under the agreement between the exchange and these banks, customers wanting to avail financial assistance can deposit their goods in exchange-approved warehouses. The banks providing pledge finance will provide loans using the deposited goods as collateral.

Apart from these banks, 10 non-banking financial companies, too, have tied up with NCDEX for extending pledge finance through this facility. So far, Rs 946 crore has been disbursed against 288,000 tonnes of commodities currently valued at Rs 1,358 crore.

Kotak Mahindra and associates are significant shareholders in Business Standard Private Limited.