Indian agri logistics and warehousing company SLCM Ltd, a wholly-owned subsidiary of Sohan Lal Commodity Management Group, has signed a memorandum of agreement with local lender United Amara Bank (UAB) for collateral financing in Myanmar.
The move is aimed at strengthening the network for providing collateral management solutions to farmers, processors, traders, exporters and importers across Myanmar, SLCM said.
According to the deal, UAB will offer their customers financing for their commodities which will be stored at SLCM managed warehouses for a stipulated period.
SLCM Ltd would undertake sampling, testing, grading, assaying, fumigation, aeration and quality certification of the commodities to ensure the quantity & quality of the pledged commodities.
Sandeep Sabharwal, SLCM Group CEO, said, “Collateral financing has been a challenge in Myanmar but recently we have seen a paradigm shift in the policies and economy, especially relating to agriculture and collateral financing.
“Myanmar is an important region as 70 to 80 percent of India’s pulse imports come from Myanmar. As per our strategy this fiscal, we are expanding into key geographies to replicate our model and this is another step towards this goal.”
SLCM had earlier tied up with Yoma Bank and CB bank in Myanmar to provide collateral financing and Sabharwal said this partnership will strengthen the firm’s foothold here.
“Our process-oriented model has been successful in India where scientific warehousing is gradually becoming a priority,” he added.
Than Win Swe, CEO of United Amara Bank, said, “We have over the last three years engaged in stock financing of a number of import and export customers and a collateral management scheme will allow us to explore expanding this activity and provide more options for our customers.”
Myanmar, where collateral based lending is limited mostly to land holdings, the recent shift of banks to include stock and goods as collateral has been dubbed as landmark achievement.
Through the initial tie-ups of SLCM with Myanmar banks, loans worth $625,000 have been disbursed and 110,000 square feet of space were leased, with 14 different commodities racking up about 4.5 tonnes.
SLCM has been handling more than 157 agriculture commodities including cotton, barley, castor seeds, wheat, pulses and maize across India. It manages a network of more than 750 warehouses and 15 cold storages across 17 states in India with a total capacity of over 1.75 tonnes spread over 9.51 million square feet area and a throughput of more than 240 million tonnes.
Source: Myanmar Business Today