Strategies to be devised to increase the registration of warehouse for issue of NWRs:-
1.The regulations are for day to day activities of warehousing business and need modification up gradation from time to time and Government approval procedure takes lengthy time to solve the issues at proper time, for which Government approval is not necessary. The WDRA shall be empowered to make regulations by its own for which no approval of central Government shall be necessary.
2 The confidence level of the depositors for keeping their goods in privately owned warehouses registered with WDRA is very low, due to which the owners also do not find any initiative for getting their warehouses registered. It was discussed that there is no comfort level in getting the registration done, because recoveries due to losses is very uncertain as the punishment provisions provided in the WDR Act, 2007 are off course deterrent to such losses but there is no solution for grievances of the depositors and Banks for recovery of their losses which are not covered under any insurance policies.
Therefore Authority has to devise some preventive methods to eliminate chances of losses such as to ascertain good background and good track history of the owner/Warehouseman or by appointing some outsourced agencies who can work as collateral Managers also of such warehouse which are registered by WDRA, or by taking help of state Govt. appointed licensing authorities whose basic duty also is to ensure fair and proper running of warehouses before granting them the licenses for warehousing. This will bring confidence amongst depositors and Banks.
3 Besides, The Act shall provide penalty and punishments for the registered warehouses for violating the provisions of the Act but surprisingly there is no punishment/penalty for unregistered warehouses violating the same provisions of the Act. This non inclusion of punishment/penalty for unregistered warehouse is a like an incentive for violating all norms and regulations of the Act and getting scot free.
4 The Act shall provide provision for indemnity fund.
The indemnity fund is a type of insurance program that protects the farmer from loss of value should the grain be destroyed or damaged beyond its economic value while in storage. Without the indemnity protection, the risk of storing the grain for sale at a future time might be too high. The indemnity fund shall give a financial support system for the recovery of loss to the depositors/beneficial owners in the event of any failure of the warehouseman to deliver the goods or pay compensation as per its commitment, because the Act provides for punishments including recovery but which may take years for the metropolitan court to decide. Besides recoveries are also not possible in certain cases like bankruptcy and other reasons such as force measures and natural losses due to moisture driage etc.
Therefore, the Act shall provide provision of some corpus fund which may be in the name of indemnity fund to mitigate financial risks which cannot be recovered under any circumstances but are protected under various provisions of the Act by the Government. This will protect integrity of NWR system and therefore NWR issued by a warehouseman under the Act will be a “good title”
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5. WDRA shall have judicial status with powers to settle disputes of all types in different warehousing activities to be notified.
6The registration of warehouses shall be in the name of warehouseman along with the name of owner and name of company, to have more clarity on the part of fixation of responsibility.
7 The Act shall include provisions for indemnity fund to mitigate financial risk of stake holders i.e. depositor, banker, financer, holder of warehouse receipt in whose name the depositor has endorsed.
8.The activities of logistics and supply chain management shall also be covered under the preview of WDRA.
9. The clarity is required for getting the registration done by a warehouseman for a part of the warehouse in the form of minimum one compartment/shed/godown.
10.Scope of offences and penalties may be broadened by way of notification of authorizing WDRA nominated officer to seal a godown which shall be duly protected by police.
11. The scope of WDRA shall also be broadened in formulating various standards, code of practices, designs and standardization of all procedures of different activities pertaining to all warehousing activities.
12.The section 43, 44 and 45 prescribes punishments of imprisonment up to three years but does not empower WDRA to recover the damages/losses under the Act.
13. Provision shall be there in the Act to include banker and endorse, as their right to verify physical condition /physical presence of the stock along with the value mentioned in NWR to increase the comfort level.
14.Norms of storage losses due to natural driage shall be included in the Act for various commodities.
15. Provision shall be there in the Act to include the condition that the endorsement done by the depositor shall be immediately informed along with name and address of endorsee.
16. The WDRA role shall be as a regulator to ascertain that all activities of warehousing in India are in accordance of the norms and procedures prescribed by WDRA and to deal with the matters accordingly.
17.Min.of Finance May issue guidelines to all banking regulators and financial institutions to devise attractive schemes for popularising NWRs
18. WDRA in consultation with MEA ,RBI and NABARD may make regulations for making rating of warehouses based on proposed standards which may result into reflecting different level of confidence of different registered warehouses.
19. Banks may be advised to prioritise loans to WDRA registered warehouses,for which Banks may be empowered at local branch level to reduce rate of interest 2-3%,depending upon ratings as per the said regulations laid down.
20. All APMCs,local warehousing license issuing authorities may also be given space in the regulation making process.
21 Example of MP Govt, may be followed by other state govts.to give priority to WDRA registerd warehouses,wherein more % of share to owners of warehouses is given which are registered with WDRA,in storage of govt.procured food grains.
22. The FMC had issued circular dated 30.08.2013 for the mandatory registration of Exchange-accredited warehouses with the WDRA, accordingly the WDRA has been receiving following feedback for doing registration of exchange accredited warehouses:-
Since the failure of the warehouse receipt system appears to be one of the main reasons for the crisis in the NSEL, the mandatory registration provides an opportunity and a challenge to the WDRA to establish a regulatory mechanism for oversight and integrity of the warehouse management system as follows:-
AWherever not full but part of the warehouse is required by the Exchange, the WDRA should protect the interest of other depositors, and look into the warehouse as a whole.
In devising the mechanism and the framework, the WDRA should study all the lessons learnt from the NSEL and provide safeguards to prevent recurrences.
B“Fit and proper conditions” for WSPs should be worked out and specified by the WDRA.
C.The WDRA should specify comprehensive norms for insurance as mandated under the W(D&R) Act.The WDRA should evolve suitable norms on capitalisation, ownership, financial adequacy, etc. of the WSPs.
D The WDRA should revisit the norms for the infrastructure, maintenance and quality standards for the Exchange-accredited warehouses.
E.The WDRA should also work out a financial support system for the recovery of loss to the depositors/beneficial owners in the event of any failure of the WSP to deliver the goods or pay compensation as per its commitment.
F. A robust ongoing inspection system should be put in place.
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