Dena Bank will fund the creation of warehousing infrastructure by Star Agri in Tier 2 and 3 cities.
As part of the agreement by the parties, Star Agri would provide collateral management services to the Bank and warehousing facilities to end users pan India. Commodities like paddy, wheat, mustard, soya, maize, cotton and other commodities would be stored in StarAgri warehouses.
Against these commodities received in their warehouses, StarAgri would issue the Bank, warehouse receipts which would be funded by Dena Bank to the extent of 70-75% of the value of the receipt benefitting farmers, traders, processors, millers and other agri based businesses.
Dena Bank has set up a modest target of Rs.500 crores of agri funding for the short term period ending December 2012 mainly targeting the kharif crop to be harvested in September-October followed by a more challenging target in the next crop-year.
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