Warehouse Receipt Financing

October 11, 2019

After completing two years of the partnership titled ‘Retail Banking and Branchless Banking in Manang, Rukum and Achham’, Prabhu Bank and UKaid Sakchyam Access to Finance programme jointly initiated an add-on effort using the shared resources. In line with the demand-driven product designed with other banks, Ukaid Sakchyam and Prabhu Bank introduced a financial product focused towards Small and Medium Enterprises (SMEs).


Farmers who rely on seasonal products for their livelihood often find it hard to attain financial stability due to the irregularity of their agricultural income. The price of their produce is usually lower during the harvest time due to increased supply. To be able to sell their produce at a higher profit margin the farmers need to keep their produce in the storage and wait for a few months till the supply gets moderate leading to price increment. However, pressing financial needs arising out of household consumption, input purchases and lack of access to proper storage facility often force the farmers to sell their seasonal produce immediately after the harvest, usually at a much lower price. Even if a farmer keeps the produce in storage, to meet their financial requirement they go for available financing channels which often are the local money lenders or other informal channels that charge significantly high-interest rates.

The product

The potato farmers in Banke and Bardiya were facing the same issue with their produce. The average price of potatoes during the harvest period – February till April — ranges from NPR 15 to NPR 20 per KG, which could get as high as NPR 25 to 30 per kg after the harvest period ends. Although Bheri Cold Store in Kohalpur, Banke District, had been providing the potato farmers with the storage facility, most of the farmers weren’t too keen to store a large quantity of their produce as they would require to sell their produce immediately to fulfil their financing needs.

Warehouse receipt finance

To address the issue, UKaid Sakchyam designed a concept of ‘Warehouse Receipt Financing’ in partnership with Prabhu Bank Ltd and Bheri Cold Storage Cooperative Ltd. The partnership launched a new loan product called ‘Prabhu Krishi Bhandaran Karja’.

Under the partnership project, any farmer who avails the storage facility at Bheri Cold Store and wants to take a loan will receive a recommendation letter and a warehouse receipt with the details of the amount of the produce stored by the farmer. The documents make the farmer eligible to apply for a loan worth 70% of the value of goods or maximum loan limit of 400K for women clients and 300k for male clients from the Kohalpur branch of Prabhu bank. The loan amount is booked for a year, but the client can settle the loan whenever s/he wants to sell the goods. Financing is provided against the security of warehouse receipt issued by Bheri Cold Store.

Ware house receipt flow chart

Having a loan product specifically targeting the needs of farmers during the storage period also encourages farmers to increase their agricultural production since financing is directly proportional to the amount of produce stored. Besides product design, Sakchyam is also providing support in marketing and promotion of the product.


The partnership has completed two seasons and so far 50 farmers have availed loan worth NPR 6,678,500. This scheme is ongoing and is expected to add more beneficiaries in the coming days.

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