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News
Maha sugar mills seek clarity from RBI on soft loan norms
Date:
12 Apr 2019
Source:
The Financial Express
Reporter:
FE Bureau
News ID:
36178
Pdf:
Nlink:
The Maharashtra State Cooperative Sugar Factories Federation (MSCFF) has sought clarity in guidelines from the Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (Nabard) for the utilisation of the Centre’s scheme for a soft loan of Rs 10,540 crore.
The Centre had recently announced a soft loan of Rs 10,540 crore for payment of Fair and Remunerative Price (FRP) in the sugar season of 2019-2020.
In a representation to the government, the federation pointed out that bottlenecks continue to be hindrance for implementing the scheme, thus depriving the sugar mills from utilising the facility and coming out from the present financial crisis.
Sanjay Khatal, MD of the federation, pointed out to the exhaustion of the sectoral exposure of banks for the sugar industry, adding that there has been exhaustion of the unit exposure limit of individual mills as well.
The blockage of liquidity in the form of huge unsold stock of sugar both under Buffer Stock Scheme as well as under the Monthly Release Mechanism Quota System has led to financial distress, he said.
“There has been reluctance on the part of banks to consider equivalence between white sugar and raw sugar. Bankers are prepared to release stocks for raw sugar limited to financing value realisable at export price failing to recognise the assistance amount for FRP payment payable by the government,” he pointed out.
The ministry of finance should urge RBI to analyse the situation in perspective and undertake some remedial measures so as to ensure that the scheme declared by the government gets effectively implemented, he said.
This should include measures such as relaxing sectoral exposure and unit exposure limit for a period of one year by at least 15%, permit 100% finance for Buffer Stock Scheme quantity instead of the present 85-90% and to equate valuation of white sugar and raw sugar with difference limited to Rs 100 per quintal towards difference in production cost, Khatal said.
The department of food and public distribution (DFPD) should permit 80% release of assistance towards FRP payment based on the “Let Export Order” in the Shipping Bill and Clean On-board Bill of Landing duly endorsed with “shipped on board” and containing details of Shipping bill number; instead of the present insistence of BRC for 100% release, he said.
Khatal said that the association had flagged the issues way back in May 2018 and July 2018.
Mills in Maharashtra have not been able to pay FRP in full to farmers and FRP dues still continue to remain a concern with the figure touching nearly Rs 5,000 crore.
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