Warehouse Receipts to be Used to Secure Loans
Bank Indonesia (BI) is set to issue a directive providing a legal basis for the country's banks to accept warehouse receipts as collateral, Trade Minister Mari Pangestu said Tuesday (13/2/07).
"For a warehouse receipt to be used as collateral, there needs to be an intermediary bank. BI is preparing a directive so that warehouse receipts can be legally accepted as collateral," Pangestu was quoted as saying by The Jakarta Post.
She said that with the issuance of the directive, it is expected that banks would no longer be reluctant to extend loans based on the surrendering of warehouse receipts.
A warehouse receipt is a document that proves the delivery of a commodity into the custody of a warehouse, and can be traded or used as collateral. Warehouse receipts are widely used as collateral in developed countries, such as in the US and Canada, and in many developing countries, including India, the Philippines, Ukraine, Brazil and Zambia.
The government will permit the use of warehouse receipts as both collateral and as negotiable instruments from July 14. The move follows one year of preparation, including the introduction of the concept to all involved -- civil servants, business players and the banks.
"For a warehouse receipt to be used as collateral, there needs to be an intermediary bank. BI is preparing a directive so that warehouse receipts can be legally accepted as collateral," Pangestu was quoted as saying by The Jakarta Post.
She said that with the issuance of the directive, it is expected that banks would no longer be reluctant to extend loans based on the surrendering of warehouse receipts.
A warehouse receipt is a document that proves the delivery of a commodity into the custody of a warehouse, and can be traded or used as collateral. Warehouse receipts are widely used as collateral in developed countries, such as in the US and Canada, and in many developing countries, including India, the Philippines, Ukraine, Brazil and Zambia.
The government will permit the use of warehouse receipts as both collateral and as negotiable instruments from July 14. The move follows one year of preparation, including the introduction of the concept to all involved -- civil servants, business players and the banks.