The Maharashtra State Cooperative Bank (MSCB) has sanctioned working capital of R3,200 crore to 29-odd sugar cooperatives in Maharashtra with positive net worth for the sugar season of 2013-14.
The bank has stopped providing any working capital to factories with negative net worth, Pramod Karnad, bank MD, said.
Last year, the bank had sanctioned R3,500 crore working capital to sugar factories in the state.
The crushing season for mills in Maharashtra has begun with 30-odd mills commencing operations, while the rest are yet to start the work following demands by farmer bodies for higher first cane payments.
Around 170 state sugar mills are expected to crush around 640 lakh MT of cane for the sugar season of 2013-14 and sugar production is expected to touch 73.5 lakh MT.
Karnad said the state government has decided not to provide a guarantee for factories with negative net worth. As per directives from the RBI and National Bank for Agriculture and Rural Development (NABARD), no working capital should be advanced to factories with negative net worth, of which there are about 30 in the state, unless there is a state government guarantee. Some of the factories with negative net worth have approached private banks and district central cooperative banks for the working loan, he added.
Karnad said so far 29 mills had sanctioned the limits for working capital from MSCB and another four to five banks with positive net worth would approach the bank soon. District cooperative banks will be funding the mills in their respective districts, he explained.
It may be mentioned here that nearly two years after the RBI superseded the board of MSCB over financial irregularities and administration collapse, the nodal bank for all cooperative banks in the state is now out of the red.
Karnad said the bank earned a net profit of R315 crore for the year ended March 2013. When the administrators took over the reins of MSCB in May 2011, the accumulated loss for financial year 2010-11 stood at R253 crore, followed by R175 crore in 2011-12, and R76 crore in 2012-13. The bank's CRAR is 11%.