Public sector lender Dena Bank and Star Agri have signed an agreement to fund warehousing infrastructure in Tier 2 and 3 cities.

As part of the agreement, the Jaipur-headquartered firm will provide collateral management services to the bank and warehousing facilities to end users pan India.

Commodities such as paddy, wheat, mustard, soya, maize, cotton and other commodities would be stored in post harvest agri solution provider’s warehouses.

StarAgri will issue warehouse receipts which would be funded by Dena Bank to the extent of 70-75 per cent of the value of the receipt to benefit farmers, traders, processors, millers and other agri based businesses.

Agri services are an attractive opportunity as there is a storage deficit of nearly 50 million tonnes for agri warehousing, the bank release said.

IDFC Private Equity Fund III, managed and advised by IDFC Alternatives Asset Management Company, has made investment of Rs 150 crore in Star Agri earlier this year.

It has a presence in 10 States and operates 750 agri-commodity warehouses with a cumulative capacity of around one million tonnes.

Dena Bank has set a target of Rs 500 crore 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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