As a leading financial institution in Pakistan dedicated to serve the needs of the farming community, Zarai Taraqiati Bank Ltd (ZTBL) is continuously innovating to develop products and services for the benefit of the agriculture sector. One such example of its innovations is the warehouse receipt financing scheme for agriculture commodities.
This scheme allows the use of commodities as collateral to secure loans. In a typical warehouse receipt financing approach, a farmer stores commodities at a certified independent warehouse. The commodity is graded and checked for quality and a receipt is issued by the warehouse operator to the farmer, specifying the quantity and quality of the commodity. The farmer can use the receipt as collateral to access loans from financial institutions, while also enjoying the advantage of selling these commodities in the market when prices might be higher. For financial institutions, warehouse receipt financing help reduce credit risk in lending to farmers.