Inventory Financing around the world: 5 markets, one common thread

ABL (Asset-Based Lending), with inventory and receivables as the main collateral, is a corporate credit segment worth hundreds of billions of US dollars. Lenders in the regular survey of the Secured Finance Network (SFNet, the US secured finance association) alone had about USD 320 billion in committed credit lines at the end of 2024. The Office of the Comptroller of the Currency (OCC) has even issued a dedicated handbook guiding banks on managing this type of lending.

This small country is the global centre of collateral management (monitoring and managing collateral on behalf of lenders). Control Union has a network of more than 270 offices in 80 countries; C. Steinweg operates over 2 million m² of warehouses and quays in the port of Rotterdam alone. These firms have turned “being the bank's eyes and ears” into an export service: measuring stock with 3D scanners, GPS-enabled smart seals, independent reports for lenders. Wherever commodity financing happens, Dutch warehouse monitors are usually there.

India set up the Warehousing Development and Regulatory Authority (WDRA) and standardised the electronic Negotiable Warehouse Receipt (e-NWR). State Bank of India (SBI), the country's largest bank, lends up to about 75% of the value of goods on a warehouse receipt, depending on the type of warehouse. In December 2024, the Government of India launched a credit guarantee scheme worth 1,000 crore rupees (about USD 120 million) to encourage banks to lend against e-NWRs.

After nearly 20 years of promoting ABL, in June 2024 Japan enacted the Act on Promotion of Business-Based Financing, creating a new security right over the whole value of a business (enterprise value charge). The aim is to reduce the long-standing reliance on real estate collateral and personal guarantees.

After high-profile warehouse fraud cases, notably a single lot of goods pledged repeatedly to multiple lenders, China focused on technology. In 2020, a blockchain-based digital warehouse receipt platform for the petrochemical sector let businesses pledge goods held in tanks and receive disbursement in less than a day, at a reported cost about 40% lower than conventional trade finance.

The Philippines passed the Personal Property Security Act in 2018 with technical assistance from IFC. Indonesia legislated its warehouse receipt system in 2006. The whole region is reforming in the same direction: opening the way for businesses to borrow against movable assets, including inventory.