FAQ’s

FAQ's

A Warehouse Operator desirous to get his warehouse accredited with NCMCL, will approach NCMCL wherein NCMCL’s Sales and Marketing personnel will coordinate with the potential customer (Warehouse Operator) about the basic documentation and other requirements.

After completion of documentation process the Sales and Marketing personnel will get the Application Form signed for the customer.

The completed file together with accreditation fee will be submitted at NCMCL head office for review. Any discrepancies in the documents will be highlighted and specifically marked and get resolved.

Once the documentation process is completed, NCMCL will appoint an assayer to inspect the warehouse in line with the accreditation criteria. The assayer will submit its inspection report with the actual findings.

If the storage facility meets the required criteria, an Accreditation Certificate will be issued to the warehouse or otherwise the customer will be informed of corrective measures to be taken and a follow-up visit will be agreed.

NCMCL will deploy its EWR System at the accredited warehouse and also provide EWR System’s training to the relevant personnel.

The warehouse can now accept produce deposits from the depositors and issue EWRs.

NCMCL will accredit both types of storage facilities i.e. traditional warehouse (floor-type godown/warehouse) and steel/concrete silos which meet NCMCL accreditation criteria.

A Warehouse Operator should have staff having adequate experience of handling agri-commodities with computer literacy.

Location of a storage facility is a commercial decision to be taken by the Warehouse Operator based on cropping patterns in the area, accessibility to main road/rail networks, proximity to local grain mandis and processing facilities etc. 

To start off with, Maize and Rice will be catered to in phase 1. The operations will be scaled up gradually to broaden the scope and include other crops like oil seeds, wheat and other agricultural produce.

Accreditation charges depend on capacity of the storage facility. Please contact NCMCL for complete details.

  1. Insurance (for produce Fire and Allied Perils insurance + for personnel Fraud and Indemnity insurance)
  2. Bank guarantee/Performance Bond
  3. Security Deposit

Please contact NCMCL for complete details.

The primary source of revenue for a warehouse will be rental income for the produce stored. This rental will include monthly storage fee, quality and quantity verification/maintenance, issuance of EWR, pre-cleaning, routine fumigation, insurance of deposited produce and inward labour handling charges. Additionally, other ancillary services i.e. drying, additional cleaning/processing and packaging may be charged separately to the depositor.

One time Accreditation fee, annual accreditation renewal fee, audit fees. Please contact NCMCL for complete details.

A Warehouse Operator shall obtain appropriate insurance covers for losses and liabilities i.e. for stocks Fire and Allied Perils insurance, for its own staff, Professional Indemnity and Fraud Insurance, as specified in the Accreditation Agreement.

Through NCMCL dispute resolution mechanism. Please contact NCMCL for complete details.

Warehouse Operator shall have experienced staff with adequate experience of working in grain industry for daily operations. The warehouse Operator may also take the services of relevant service providers, as they deem appropriate for building capacity of their employees. NCMCL will arrange specific training programs for accredited warehouses to build staff capacity for EWR System usage. Additionally from to time NCMCL may arrange training of relevant warehouse personnel in produce testing and other operational needs.

A Warehouse Operator may rent/lease a facility, however, storage rental agreement need to be for a period of at least XX years and must submit a registered lease/sub lease deed. A landlord waiver will also be required in case of a rented warehouse. Please contact NCMCL for complete details.

Some local approvals may be required. Please consult with your local lawyers in this regard.

This is one of the primary responsibility of the Warehouse Operator. In case of any quality or quantity loss during storage, the Warehouse Operator is liable to compensate the depositor/EWR holder. The Warehouse Operator is required to take utmost care upon receipt of produce at intake to ensure no substandard quality is received and ensure regular monitoring and safe keeping of the same.

The charges are based on storage capacity slabs. Please contact NCMCL for complete details.

Each storage facility will be inspected individually and Certificate of Accreditation will be issued for each individual storage facility.

No. This is not allowed under the accreditation rules.

Yes, other ancillary services may be provided.

Warehouse Operator’s own stocks can be pledged to a bank provided they are stored separately from the other depositors’ stocks.

Rentals may be charged based on mutual agreement of the Warehouse Operator and depositor. However, these charges have to be conveyed to NCMCL and fed in the EWR System accordingly.

Rental charges include Monthly storage fee, quality and quantity verification/maintenance, issuance of EWR, pre-cleaning, routine fumigation, insurance of deposited produce and inward labour handling charges. Additionally, other ancillary services i.e. drying, additional cleaning/processing and packaging may be charged separately to the depositor.

Yes. This will be a totally commercial decision to be taken by the Warehouse Operator based on mutual agreement.

Please refer to the relevant tax laws in this regard. For details, please consult with your tax consultant.

EWRs will be issued through the EWR System deployed by NCMCL at the accredited warehouse. Details of all commodities received in the storage facility will be entered in the EWR System and subsequently an EWR will be issued through the System. Please contact NCMCL for complete details.

Linkage with the participating banks may be made through the Warehouse Operator, the Brokers at Pakistan Mercantile Exchange, the local branches of banks in the vicinity and information available on the NCMCL website. Banks may also approach EWR holders through the EWR System.

Please refer to the relevant CMC Regulations and relevant documentation/agreements executed in this regard.

Under the CMC Regulations 2019, NCMCL has been licensed for accreditation of warehouses based on international best practices. The accreditation process is to be carried out strictly in compliance with the regulations and Standard Operating Procedures (SOPs) to ensure that quality of produce stored is maintained throughout the storage period and the Warehouse Operator has requisite security and vigilance infrastructure in place. NCMCL will have a system in place whereby frequent snap checks are regular audits of the accredited facilities are carried out to ensure strict compliance with the SOPs and CMC regulations.

The Warehouse Operator will carry out testing for the purpose of grading the produce. All of the details will be captured in the EWR system, which will issue the EWR as a title to the produce stored. The Warehouse Operator will be responsible to maintain the quality and security of the produce.

The banks have an option of taking the EWR under its pledge or transferring the same to their account and become the holder. In both cases the EWR will be blocked for any further movement, until the relevant bank allows the same. Please refer to CMC Regulations for further details.

Any depositor including farmer, trader or processor interested in storing the produce in an accredited warehouse will approach the same. The Warehouse Operator will open the account in the EWR system in line with the documentation requirement and the criteria laid down by NCMCL.  The Warehouse Operator will carry out testing for the purpose of grading the produce. Relevant details will be captured in the EWR system, which will issue the EWR as a title to the produce stored. The Warehouse Operator will be responsible to maintain the quality and security of the produce.

All the participating banks will be provided with the relevant administrator authorities, viewing authorities, financial authorities, as required.

The banks would have access to warehouses where the produce financed under EWR regime is stored. They may carry out on site reconciliation of actual stock being maintained with the stock register/records. Banks can also check and validate adequacy of security arrangements, as agreed by the Warehouse Operator in line with the SOPs.

A detailed criteria to ensure security of the collateral has been designed, which the Warehouse Operator is required to adhere to. The Warehousing Guidelines, SOPs and Accreditation agreement will ensure strict compliance with this criteria. Following are the high level measures:

  • Construction of the warehouse as per Guidelines
  • Testing and grading of the produce
  • Quality and quantity maintenance during storage period
  • Security and monitoring measures
  • Following laid down procedures
  • Accessibility to relevant stakeholders
  • Arranging relevant insurance, financial guarantee /performance bond/security deposit.

EventDescription and Associated RiskMitigation Strategy
ConnivanceConnivance between the Warehouse Operator & Accreditation team leading to concealment of factual position and compromising on accreditation standards• Detailed SOPs developed with standards for accreditation.
• Clear segregation of roles of front end & verification staff.
• Geo mapping & photographic evidence collection.
• Warehouse Operator Agreement clearly stipulates rights, duties & obligations.
• Monitoring via onsite inspections & spot checks.
Fraudulent Issuance of EWRIssuance of EWR by the Warehouse Operator without any goods in possession• Phased roll out. Soft launch with Warehouse Operators having impeccable market reputation. Scale up based on learning from the soft launch
• EWR to handle issuance process with four eye principle
• Verification of depositors via biometric check & other verifications including Verysis check
• Digital record maintenance & information sharing via API
• Fidelity Insurance Cover
• Bank guarantee to be provided by the Warehouse Operator
• Monitoring of activities with the help of CCTV’s and other digital tools
Erroneous Reporting on EWRConsidering the low literacy levels. Warehouse Operator may issue the depositor with an EWR by under reporting quantity and mis-reporting grades and prices. Leading to lower valuation• EWR to be issued only electronically
• Issuer to share the copy (not valid for trade, transferability or pledge) to depositor & maintain/upload acknowledgement
• Terms and conditions on EWR to be provided in Urdu along with acknowledgement by the depositor of same via thumb impression or signatures
• Depositor to receive EWR details via cell phone

Comingling of various grades of the same productThe Warehouse Operator may mix different grades of the same produce effecting bank margins in case of default or may cause loss to the depositor• Grade testing report to be placed in records of the depositors and uploaded on NCMCL EWR System and captured on the EWR as well
• Monitoring by NCMCL via spot checks (reconciliation of stocks) & onsite audits
• Fidelity insurance cover (covering a percentage of value)
Theft, Fire, terrorism or any other natural calamity damaging the warehouse and the stored goodsLoss of product/collateral• Comprehensive insurance cover for the products stored under the NCMCL program at the warehouse

The banks are encouraged to develop product programs for financing under the EWR regime. Considering the fact that the regime will be governed under stringent standards of accreditation of warehouses, majority of the operational risks involved in conventional “muqadam” based financing will be mitigated. Given this banks are expected to offer competitive risk based pricing to the depositors. The banks can offer both, fixed or floating rates under the program. All the partner banks will be obliged to share 0.5% per annum of the amount financed with NCMCL.

In case of default, the bank will be authorized to acquire produce stored against a particular EWR by serving requisite notices to the depositor as per law. On the completion of due legal process bank will have the right to sell the EWR or get the produce released for selling it in the local ghalla mandis (Grain Market). Please contact NCMCL for complete details.

To start off with, Maize and Rice will be catered to in phase 1. The operations will be scaled up gradually to broaden the scope and include other crops like oil seeds, wheat and other agricultural Produce.

This would be more of cash financing for the short term. Generally, loans would not exceed six months in tenor

The main difference is the fact that the warehouse receipt will be in electronic form as compared to conventional paper based ones, which run the risk of being counterfeited. The depository of these EWRs will be the IT system managed by NCMCL in a secured environment. All transfers and withdrawals at the Warehouse Operator’s end will be subject to layers of authentication and validation. Similarly, any lien marking and removal can only be done by the relevant bank after carrying out the due process on the EWR system.

  1. The main difference is the fact that the warehouse receipt will be in electronic form as compared to conventional paper based ones, which run the risk of being counterfeited. The depository of these EWRs will be the IT system managed by NCMCL in a secured environment. All transfers and withdrawals at the Warehouse Operator’s end will be subject to layers of authentication and validation. The pledged EWR will be blocked in the System and will not be available for sale.

The EWR Holder will be co-assured. The commodities stored in the warehouse will be insured against theft, fire, natural disasters and terrorism, etc by the Warehouse Operator. Meaning thereby that the collateral will be secured and the claim process against any untoward incident will be initiated by the Warehouse Operator. Once the insurance claim is processed by the Insurance Company, bank and depositor will be compensated accordingly. In case of the pledged EWR, banks holding a lien will receive the claim amount which will reimburse balance to the depositor after deduction of outstanding principal and accrued mark-up.  In addition to this Warehouse Operator will also be required to take Fidelity Insurance, which will provide an extra coverage of risk, up to a certain extent, against fraud.

Any EWR which has been financed will be lien marked in the EWR system by the bank. The lien marking process will ensure that this particular EWR can neither be sold nor the goods can be released against it without the authorization/removal of lien by the bank in the EWR system. If the depositor intends to either sell the EWR or wants the stored produce released, it will only be done after settlement of outstanding principal and mark-up by the depositor to the satisfaction of the bank.

Islamic banking tends to create link with the real sectors of the economic system by using trade related activities. Since, the money is linked with the real assets Islamic finance, therefore EWR regime provides an ideal vehicle for Islamic mode of financing where money is actually used as a medium of transaction and not a produce. Murabaha agreements can be structured to fund clients against EWRs. It involves a request by the client to the bank to purchase certain goods. The bank does that for a definite profit over the cost, which is stipulated in advance

A depositor needs to get registered with NCMCL prior to depositing the produce and also sign storage agreement with the warehouse. Once the documentation is completed, the depositors can bring their produce into the accredited warehouse where the produce will be tested/graded, weighed and offloaded into the warehouse and subsequently an EWR will be issued to the depositor.

 

Currently the volume is set at minimum 10 metric tons for issuance of an EWR.

For Individuals

  • Copy of Computerized National Identity Card of the applicant.
  • Copy of Computerized National Identity Cards of Nominee (if applicable)
  • Copy of passport of the applicant, or Nominee(s) (in case of non-residents)
  • Copy of Income tax return (if applicable)
  • Copy of land document (if applicable)

For Companies

  • Attested copies of Memorandum and Articles of Association
  • Certificate of Incorporation.
  • Partnership deed (registered/unregistered)
  • Board of Directors’ Resolution (for incorporated companies).
  • List of Authorized Directors/Officers, Warehouse Operator would operate the Account with attested copies of their CNICs.
  • For Sole Proprietorship account, an Account Opening Request on Business Letterhead

 

Monthly storage fee which includes quality and quantity verification, issuance of EWR, pre-cleaning, insurance of deposited produce, routine fumigation and inward labour handling charges. Please contact NCMCL for complete details.

Note: additionally, any other ancillary services i.e. drying, additional cleaning/processing and packaging may be charged separately by the warehouse.

 

An EWR holder will approach local designated branch of the participating bank, warehouse operators and NCMCL and participating bank’s website. The depositor may request the bank to extend financing against the EWR in his name, details already in the EWE System to the bank. The bank will complete its internal documentation and will extend financing as per its laid down criteria. Interest/mark-up will be charged by each bank as per its policy.

 

A Warehouse Operator being the custodian of the produce, is liable to return the same grade and quantity to the depositor/Holder as stated on the EWR. In the event of difference in quality or quantity, Warehouse Operator is liable to compensate the depositor. In case of any unresolved dispute, NCMCL may be contacted.

 

This depends on the agreement with the Warehouse Operator and availability of separate storage space at the warehouse. In silo storage, produce of same grade/same variety will be stored in comingled form.

Warehouse will only accept those lots which conform to the laid down standards. Any rejected lot will be taken back by the depositor at his cost.

A prospective buyer should get his account opened with NCMCL. This can be facilitated by the Warehouse Operator, PMEX Broker or a bank.

An EWR holder has two options to sell his EWR as follows:

  1. Off exchange sale (local market). The EWR holder may sell his EWR to a buyer in the local market. The Holder can initiate the transaction through the EWR System and after due verification, the EWR can be transferred to the buyer. However, warehouse related charges must be settled prior to transfer of EWR title to the buyer.
  2. At Pakistan Mercantile Exchange: The EWR holder may also sell his EWR to a buyer at PMEX as per PMEX SOPs.

 

Yes, an EWR Holder can initiate the sale transaction without visiting the warehouse through logging into the EWR System using his login ID and password. However, all charges to-date have to be settled prior to the transfer to be effected.

 

EWR will be issued only in electronic form, however, a copy may be obtained from the warehouse which will not be valid for any financing or transfer of title purposes.

 

The EWR holder may lodge a written complaint to the warehouse Operator under intimation to NCMCL giving full details of the EWR.

 

In case of damage/destruction of a warehouse, the Holder will be compensated through the insurance obtained by the Warehouse Operator.

 

  1. A pledged EWR can only be sold subject to clearance of the bank. In this case the loan (principal and mark-up) will be settled first. Only after loan settlement, the bank will issue release order for the produce which can then be withdrawn physically from the warehouse.

     

A prospective buyer should get his account opened with NCMCL. This can be facilitated by the Warehouse Operator, PMEX Broker or a bank.

A buyer has two options to purchase EWR:

  1. Off exchange sale (local market). The EWR holder may sell his EWR to a buyer in the local market. The Holder can initiate the transaction through the EWR System and after due verification, the EWR can be transferred to the buyer. However, warehouse related charges must be settled prior to transfer of EWR title to the buyer.

At Pakistan Mercantile Exchange: The EWR holder may also sell his EWR to a buyer at PMEX as per PMEX SOPs.

 

It depends on the agreement between the seller and buyer. However, the transaction can only be effected after settling the due rentals and other charges of the warehouse.

The rentals and other costs will be calculated through the EWR System.

 

Please visit https://www.pmex.com.pk/client-trader/ for complete details regarding account opening process at PMEX.

 

EWRs can be sold in full quantity and/or can also be split to sell the produce partially.

EWR holder can login into the EWR System through his User ID and Password and can access the relevant EWRs details.