KARACHI - The International Council of Small and Medium Enterprises (ICSMEs) has felicitated the Small and Medium Industrial Leasing Estates Pvt Ltd (SMILE) for their appointment as facilitators and collateral managers and making new waves in collateralise post harvest financing for grains and commodities for the traders.
The ICSMEs complimented SMILE for their determination and hard work and dedicated efforts to make the warehouse receipt financing acceptable to the commercial banks under efficient and sound security system. According to the officials the concept of warehouse receipt financing is practiced in different countries of the world and is an ideal system where the goods themselves serve as security for the loan. Basically it is financing for raw material and enabling additional finance for finished goods, goods in transit and goods in custody of authorised institutions.
The facility of warehouse receipt financing will facilitate the farmers, millers, processors and exporters to hold the goods and add value to the goods, he said. The exporters will be enabled to build inventory when the new crop arrives and will hedge them against inflation. It will facilitate the farmers to hold the crop and not sell in a hurry when the markets are unfavourable especially during bumper crops. This facility will enable the SME units to import their raw materials and keep sufficient stocks to last them for the shipping period.
The element of haste and hurry and victimisation at the hands of the middlemen and hoarders, black marketeers and profiteers will be removed.
The system is not new but the application of the concept in Pakistan is noteworthy and is important to change the mind set in collateral management in Pakistan.