Warehousing Act comes into force, receipts now negotiable

The much-awaited Warehousing (Development and Regulation) Act, 2007 has come into force with effect from October 25, 2010. The Act, legislated by Parliament three years ago, makes warehouse receipts negotiable. 

The introduction of a negotiable warehouse receipt system in the country will not only help farmers avail better credit facilities and avoid distress sales but also safeguard financial institutions by mitigating risks inherent in credit extension to farmers.  .. 

The pledging/collaterisation of agricultural produce with a legal backing in the form of negotiable warehouse receipts will lead to an increase in the flow of credit to rural areas, reduce the cost of credit and spur related activities like standardisation grading, packaging and insurance and in development of chain of quality warehouses. 

The government has also decided to constitute a Warehousing Development and Regulatory Authority under the Act with effect from Tuesday (October 26) with the publication of the relevant notification in the official Gazette. 

Besides mandating the negotiability of warehouse receipts, the Act prescribes the form and manner of registration of warehouses and issue of negotiable warehouse receipts including electronic format. 

The Warehousing Development and Regulatory Authority, an official statement said Tuesday, will comprise a chairperson and not more than two members. Significantly, the regulatory authority will register and accredit warehouses intending to issue negotiable warehouse receipts and put in place a system of quality certification and grading of commodities with a view to protecting the interests of holders of warehouse receipts against negligence, malpractices and fraud. 

Source :
http://economictimes.indiatimes.com/news/economy/policy/warehousing-act-comes-into-force-receipts-now-negotiable/articleshow/6818228.cms