Escrow settlement model to help all stakeholders of cardamom e-Auction: Board Chairman Dr. A Jayathilak
Theni , June 11: In a bid to further streamline e-auction of cardamom, Spices Board plans to Introduce an online settlement mechanism that would tremendously help all the stakeholders by ensuring timely payment to the growers of this spice and providing all information about
transactions online or through a mobile app. For developing such an online settlement mechanism for cardamom auction, the Board enlisted the services of a bank. A team from the bank visited the e-auction centre at Spices Park, Puttady and analyzed the parameters for formulation of such a mechanism. Consequently, the bank presented an ‘escrow’ settlement model to the Board.
The proposed model, which has been built in line with the existing auction system with minimal changes to fund flow procedures, will be operated via Spices Board settlement account through the identified bank instead of present settlement by individual auctioneer’s account. This will enable the Board to monitor the flow of transaction/ payment made by buyers (dealers) as also their outstanding payments, payments made to sellers (growers) and their outstanding payments, and commission charges paid to the auctioneer.
All the three stakeholders – buyers, sellers and auctioneers – will be required to do one time
registration in the online system for generating unique stakeholder ID and password. The Board will assist the small and marginal growers in doing the one time registration. The stakeholders can track the status of their payment transaction online or through mobile app.
Spices Board Chairman Dr A. Jayathilak said the proposed model has the potential to make e-
auction of cardamom more efficient by introducing greater transparency, ensuring timely
payments and putting in place a monitoring system. “The Board is seeking the views of the sellers, dealers (buyers) and auctioneers on the proposed settlement mechanism for the cardamom e-auction,” he added.
Under the proposed system, the Form “C” submitted by the auctioneer will be uploaded in the
system. The buyer would make the payment against an invoice raised for a particular lot, and the payment will be pushed by the system directly to the seller's account after deducting and paying the commission charge to auctioneer's account.
Thus, once the buyer arranges the payment via the settlement system, it will remit the amount to the bank account of the sellers within one working day of the payment made by the buyers. “This will check the possibility of default payment by the buyers, reduce the risk faced by the
auctioneers and ensure timely payment to the growers,” Dr Jayathilak said.
With the implementation of the settlement system, the delivery of the auction lot to the buyers
will be made by the auctioneer only on production of delivery challan, which would be generated on receipt of the payment against the particular lot. As the delivery of the lot will be made only after payment by the buyer, there would not be any necessity to provide the bank guarantee by the auctioneers.
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